Profit Taking Monday...

US market sold off broadly on profit taking as the Dow corrects 155 points, surrendering last Friday's gains.

It's hard to imagine Monday as a profit taking day, right? Whatever happened to the Monday effect? The Monday effect is a well known market anomaly where Mondays usually continue the trend of the previous trading day. Yes, many market anomalies, including the so called January Effect and the Christmas effect, has become more and more inconsistent lately. Why is that so? Because any structurally defined market anomaly would have been taken advantage of and arbitraged away, let alone widely known and taught market anomalies. This is the argument of the Efficient Market Hypothesis and it seems like it is becoming more and more true. Traders and investors now need to be wiser and more knowledgeable rather than depend on well known market anomalies for trading.

Today's profit taking is nothing to be surprised about and changes nothing. Investors also reallocated part of their assets into bonds as bond yields fell across the board (see bond yield curve). The Dow merely traded within the trading range of the last session, forming a sideways day. The Nasdaq composite struggled at its 200DMA but managed to take back most of their lost ground by session close. Trading volume was also much lower than the last few sessions. Nothing that will threaten the current short term and intermediate term bullish trend is on the table yet.