Stock market investors have been conditioned by years and years of repetition that sharp stock market breaks are corrections, offer buying opportunities and that there is no need for any real concern. Anyone who has panicked and sold in the past when the market has swooned has been proven foolish as the market then recovered. Market pundits and commentators distribute that message and anyone with just a few years of experience in the equities market knows the drill. Buy breaks. All will be well – until of course that it isn’t.

Market pundits and commentators tout the strong underlying economic fundamentals which they claim have not changed, eliminating any reason for selling equities. That of course, includes the White House since the president has a dog in this race having taken personal ownership of the bull market.

Here is my take on things: There is hubris and delusion at tops. The fundamentals appear to be the most bullish at a market top. You should not be able to find a bear with a telescope and just a few days ago, prior to the correction, I believe that was the case. The bull market did not begin with Trump’s electoral victory. It goes back to 2008, so as far as bull markets go, this one is mature. It did not start with Trump’s election, in fact, it was years into the making before Trump became an issue. The euphoria over Trump came in the last leg up of the bull market which had started prior to the election and was accelerated by it.

From an Elliot Wave technical analysis there are a clear 5 waves up from the 1998 low to the current high which can be a completed bull market structure. The sharp decline this week eliminating many months of market gains in a few days has what technical analysts call “impulsive” market character. Market consolidations are typically corrections. The trending moves are the trend. This sharp break was not a consolidation of recent gains but a suggestion that the major trend is changing.

As to fundamentals, the stock market is forward looking. The bullish fundamentals being touted got it to highs but it is dangerous to assume that they will be the fundamentals that are ahead of us that the stock market is trading. The fundamentals tend to follow the market. Major tops are typically volatile as bulls and bears fight it out. Given the conditioning of the public that corrections are buying opportunities, a full recovery to a marginal new high could easily be part of a larger topping process. That would be when bulls should take profits and bears should take short positions. I expect that the consensus however, that breaks are buying opportunities, would be only reinforced from another market recovery locking bulls into the market even more. The real bear likely starts when whatever low is set by this first wave down is broken later. All this is market structure. Have no emotion.

As to fundamentals -they are changing. The primary reason for the bull market in equities is that was the only place for any return from equity. Given abnormally low interest rates, CDs were worthless for return -bonds not much better – commodities having flamed out – all of the money was flowing into stocks. Inflation was low, corporate profits were rising, there was full employment and global trade flows were operating freely. That was all good stuff for the stock market.

But what comes next? If the tax cuts do what is advertised, boosting the economy, inflation will pick up and the Fed will accelerate its increase in interest rates. Higher interest rates are used to control inflation. They like a little inflation, but too much is a threat. Hard assets are typically havens from inflation holding their value. That means that instead of all the money going to the stock market that bonds and commodities begin diverting some of the capital flow away from stocks. While deregulation and the tax cuts were helpful to the economy, two other major Trump policies are significant threats to growth. They are his immigration and trade policies.

Immigrants boost U.S. GDP. They provide the needed workforce to do many jobs that citizens avoid. Without immigrant’s labor, costs will surge weighing on business profits causing them to increase prices. Trump’s clampdown on immigration will cause regional sector labor shortages and fuel inflation. The stock market is not going to like either one of those things.

As to trade, the U.S. reported a record trade deficit which will incense the Trump administration who views trade deficits as theft of U.S. property. Donald wants to build walls to block immigration and barriers to free trade. They have begun ramping up tariffs and China warned with action on grain sorghum that they will respond in kind. China will also not help finance the surging U.S. debt. We can argue that we are right and they are wrong and we can all go down with hands around each other’s throats for the good it will do us. There has never been anything good come from protectionism. If Trump’s trade policy is implemented anywhere near in line with his rhetoric, there will be a global trade war.

So in summary, the fundamentals as they go forward from today will not be the same fundamentals that the bull market thrived on in equities. They are changing and the market will change with it. This is a significant turning point.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.