Last week saw the S&P 500 fall 1.75 percent. Bringing to mind Captain Bligh's line from Mutiny on the Bounty: the beatings will continue until morale improves!
We believed upon entering the year that bears had set the table. And required only a bit of help to serve up their unappetizing meal. Thus far, that's played out. With the S&P 500 down over eight percent on the year as of Monday's opening.
We see two signs revealing that markets can fall further.

First, defensive stocks like utilities and staples have been outperforming. While tech stocks and last year's big winners, the FANG stocks, have been plummeting.
Second, the VIX (Volatility Index) currently portends further tumult. Because every important stock market bottom since 2001 has seen VIX readings above 40. And though the VIX has risen rapidly, it sits at only 26 today.
In order for the market to formulate a short-term bottom, we'll need to see true panic. The type of flush that occurs when the VIX climbs above 40. Typifying those periods where investors -- seeking only to negate their pain -- become willing to sell at any price. We are not there yet.
The next level of support sits around 1,795. We may get near that level before stocks stage a recovery rebound. Making up most of the year's losses thus far. Then, after the market has breached the water's surface and come up gulping for air, persistent headwinds will likely take stocks lower again. For the second big dip on the year. Which could escort us right to the heart of the political calendar, November's election. Speaking of elections, White House officials have repeatedly touted the strength of the U.S. economy. In fact, the president espoused during his State of the Union that those downplaying the economy are "peddling fiction."
Of course, the facts say otherwise.
Though labor data shows the U.S. approaching full employment, statistics reveal the less-than-appetizing truth behind the jobs being created.
An expansion of well-paying, career-type jobs do not result amid a less-than-middling GDP. Revealed by the fact that Q4 GDP missed the 0.8 percent annualized growth expectation. Listen, when an economy fails to hit a 0.8 percent annualized growth estimate? There's no disguising the idea that growth is anemic, at best.
As tellingly, how can the economy's critics be peddling fiction when -- in addition to a lack of economic growth -- there's been zero wage inflation, zero inflation, and a recent weakening in the U.S. dollar?
Lastly, a little-known but key indicator is trying to tell us something.
First, the National Restaurant Association's Restaurant Performance Index, which measures same store sales across the country. It dropped in December. The first time it's done so in three years. Eating out ranks among the first items consumers cut back on when the economy turns down.
Still we consistently hear of the nation's positive economic state.
The greatest sages may, on occasion, fall into error. But they do not lie down and make a home there. Leaving the administration's repeated assertions as one of two things: sloppily erroneous, or worse, completely disingenuous.
Speaking of disingenuous, Amazon announced plans to open 300-400 brick-and-mortar bookstores. About which we're torn. Because we love Amazon. The convenience. Speed. Simplicity. But, Amazon spent 20 years running an internet-based bookstore with no profits. Getting miles of rope from Wall Street in the form of stock-issued capital infusions and zero profit expectations. During which time it put out of business a legion of legitimate, physical bookstores that turned legitimate profits year after year. Only to turn around, two decades later, and open up bookstores of its own?
We'll give credit to anyone capable of playing out the long game. But that's just deviant.
Finally, Google now sits atop the market-cap kingdom. Having become the most valuable public company in the world. With a market cap of $550 billion. A few billion more than Apple. Astonishing, really. Considering the fact that hardware and physical product are no longer necessary to amass fortunes. Advertising sells just as well.
Weekly Results
Major markets finished down last week. The DJIA lost 1.59%, the S&P 500 fell 3.10%, and the NASDAQ dropped 5.44%. Small cap stocks fell 4.81%. However, the 10-year Treasury bond yield grew 8 basis point to 1.84%. Gold rose $55.65 per ounce, or 4.98%.