The former director of the Office of Management and Budget under President Reagan told us months ago he believed Washington was too dysfunctional to get anything done. By now, you know how this works. For the market to get its tax reform, we’ve been told time and again health care reform had to come first. Right now, they are still light years away from getting that done, and they are scheduled for their summer recess in a few weeks. Both Houses are scheduled to recess on July 28 and do not come back until right after Labor Day. There is growing sentiment to cancel recess and work into August. We’ll see. Regular readers to this column know I’ve lined up with Stockman to this point. Right now, I don’t see how they could possibly get tax reform by Labor Day unless they work in August. Unless they work in August I don’t see how they even get health care done.

One has to wonder when this dysfunction is going to upset the market this time. I have an idea, we’ll see if it materializes. Wednesday is the next window, it is 161 days off the Nov. 4 low prior to the election. That means the window starts almost immediately. A 161-day window can start anywhere from day 159 to 163 which makes the whole week vulnerable. I’m just speculating but one would think for the market to pull back it would need cooperation from biotech or health care and perhaps Senators playing hard ball will help the bears. Also, we have the situation in oil stocks which may or may not have to help. After all, they’ve been beaten down for so long, it’s hard to say what kind of impact they’d have if the rest of the market were to stall out.

But I can tell you this. Banks are down four days off a very interesting vibration of a high at 99.77 and 76 days in the KBW Bank Index (BKX). It could be a case where we close up several leaks in the dam but new ones start to bust open. For a while, Transports and/or biotech has been in trouble which was a month ago. Now those have healed and banks are questionable. They started Monday morning flat.

Overall, the market started higher. We are in a situation where the bear teases to wake up but either can’t do it or the bull is just too stubborn. Numerous times last week the bear tried waking up on an intraday basis but either stalled or was overcome. Of course, geopolitical risk remains incredibly high but the crowd still brushes it under the rug. It was only a week ago Congress dodged a catastrophe in Alexandria. I can assure you if the outcome there was different, the stock market would’ve closed for a few days. From one day to the next, nothing much has really changed. I still have the bigger cycle points coming at the end of the summer which line up with the bottom of the ninth inning as far as the prophet Stockman is concerned. It is feasible we end up with these conditions right through the summer.

By the way, last week one of my clients sent me an article from the New York Times on June 22 of an interview of Mr. Malkiel, who wrote “A Random Walk Down Wall Street.”  He finally admitted after 40+ years traders can take advantage of market inefficiencies. As you know his passive approach to efficient market theory for investing took Wall Street by storm for this generation of investors. This is a major victory to those of us in the timing and cycles community who’ve been waging an info war with him since the 1970s. Random Walk people believe you can’t time markets and must be invested all the time to catch the six biggest days of the year. But I won’t be holding my breath waiting for him to talk about market cycles.