Dow Jones formed a possible double top at the 35,000 area, and the move lower triggered a risk-off environment. Yet, the recent decline is not severe enough to scare bulls. After all, the index is only a few percentages off its record highs.
What is interesting is that the decline in the Dow Jones started last Friday. Despite the better than expected retail sales in the United States, the stock market was rejected at the highs.
The move lower was fueled by a similar decline in the price of oil. In fact, it may be that the weakness in the price of oil is the cause for the weakness seen in the equity markets.
Lower oil prices lift off the pressure on higher inflation expectations. Higher inflation was one of the reasons why investors bought equities, as the Fed keeps the rates at the lower boundary.