LOL! "market flips red to green on riot optimism." With a very minor edit, that reads just like a financial headline.
One thing I've realized watching the market is the S&P no longer represents the full market. A capitalization weighted index necessarily leans heavily on hard to move and well entrenched companies that don't necessarily track their associated sectors. The companies in the S&P will not falter due to the rioting but is that a sign of market health? Smaller companies will likely see some net loss going into next week as a result of a lack of faith in the outcome of rioting. Wanton burning of businesses does not bode well for small and mid caps.
Here's the bottom line . I strongly suspect we get a strong move down sometime this summer .The chop the last 4 weeks as been brutal. We know if we go to 2950 or lower we could potentially see 2600-2700 or lower sometime this summer. I'd rather take my chances after the move starts buy and then put stops in. Obviously no guarantee but a better chance of holding it i believe .
Good analysis. As you mentioned, the fallout of massive numbers of smaller businesses closing down consolidates market share into the behemoths. Small and midcaps have been sucking wind for a long time; I doubt that anyone can really estimate with any real precision what's under the hood of the 2000 companies in the Russell. That whole index is a bag of tricks floating on the scraps of liquidity from the headline indicies.
Drops will not be allowed. Fed now has power to buy ETFs. And they have infinite pockets. It is really this simple. But when the drop does manifest, it will be like nothing we ever saw. Just like this rally with 35 mil Americans unemployed.