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Friday, October 28, 2016

Daily update 10/28

Complicated mess.

GDP came out better then expected which seemed to entice some buying.  That had SPX up on the day (breadth was narrow though) when news hit that the FBI had more Hillary emails to go over.  That sent SPX down to the key 2120 level.  The selling came to a screeching halt there and the market bounced a bit the rest of the afternoon with some unusual up and down moves.  This technically put both SPX and COMPX in short term down trends.  However, we are still above key support and in mid Oct. when the trends turned down the market immediately bounced.  To complicate things further, news induced moves like this afternoon's sell off are often retraced.  If the market were to do that this time it would go higher from here.  Breadth was -58%.  New highs were 47 while new lows increased considerably to 71.

The futures show the big move down and considerable bounce off the low.  They are clearly still above support.

Despite the down day the red count dropped slightly and so it remains below 50.  One might say there is a positive divergence with the mid Oct. low since SPX closed fractionally below the low close then.  Of course, one could say we are no where near oversold so we could fall through support and drop a good ways further.  I don't know which will play out.  Price will dictate that.

One thing I know for sure is that the market did not like the idea that Hillary might not be the next president.  What the market does between now and the election might be news driven especially with the FBI involved again.  While we will not likely find out any details about these new emails before the election there could be some relevant comments made.

SPX ended the day with a bounce off of support.  It is in position to break or bounce next week.  The VIX is not as high as it was in mid Oct. when we were last here.  There has not been a particularly notable high TRIN reading in this pullback either.  From a short term oversold evaluation there seems to be less reason to buy here now then in mid Oct.  That does not preclude the bulls from showing up on Monday and buying with both fists, but it could mean any bounce from here does not carry all that far.  I think we really need a crystal ball to figure out what happens next.

Have a great weekend.


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