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Tuesday, December 13, 2016

Daily update 12/13

More excitement as the Dow closes in on 20000.

The Dow came up 46.25 points short of 20000.  Breadth was +55% which was quite weak for the magnitude of the move up in SPX.  Strength moved back to big cap tech today.  I wonder if that was because of the big pow wow between a number of tech CEOs and the Trump transition team.  New highs dropped way down to 173.  That is more then 300 new highs off the peak reading!  New lows were elevated again at 55.  Clearly the market is losing some steam.

Talk about equal and opposite reactions.  At the low election night the futures were 117 points below the 200 SMA.  Today they reached +120 points above that MA at the high.  Can you say extended.  This would be a logical place for a short term top.

The FED rate hike is tomorrow and it worries nobody.  Last night I showed the SPX chart from the last hike.  Tonight I want to talk about the VIX.  Today it close at 12.72.  The day before the rate hike in 2015 it closed at 20.95.  That suggests there is much less hedging going on this time.  That is understandable there is such a feeling that nothing can go wrong between now and year end why hedge.  They always say when nobody is worried is when you should be worried.  I don't know if the market will have a negative reaction or not to the hike.  It seems like if it does have a negative reaction it will be considerably bigger then what people expect.  Price is very extended on the upside at a logical place for short term traders to take some chips off the table.  I could see that possibly happening even without a rate hike.  Maybe its yet another non event.  I guess we will see.


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