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Wednesday, June 14, 2017

Daily update 6/14 Ultra-low Volatility #ThisTimeIsDifferent

A little up and a little down, but at the end of the day SPX was right about where it was when the FED raised rates as expected.

The action left us with a hanging man candle one day after a new closing high.  Breadth was -52%.  New highs expanded just a bit to 157.  New lows increased to 32 and are once again elevated with SPX at the highs.

The futures tested their high just before the open, but found a few sellers right out of the gate.  They have been consolidating all month.  Is this a pause to go higher or a top?

The green count crept a bit higher today, but is still nothing to write home about for bulls. 

Sellers came back in tech land.  Late day buying kept the damage to a minimum.  The problem is late day moves like that are not indicative of future direction.  I can't tell if the selling is over or not yet.

Early this morning the dollar went down considerably on a batch of weaker then expected economic data.  After the FED announcement it rallied considerably as Yellen was outright hawkish.  The FED even put out a plan to reduce the balance sheet and they want to start doing it this year.  Isn't that the most hawkish thing they could do today?  Gold and gold stocks reversed sharply.  However, TLT only barely noticed.  The stock market did not seem to care at all.  There probably is a bit of a risk that after people have time to think about what happened today they have a different opinion tomorrow.  That has been known to happen in the past.

We need to wait a bit longer to see if the tech sellers are done for now.   Small caps and transports were both showing relative weakness today.  They both got a pop after the initial tech sell off.  There is clearly money rotating around the market.  I have seen some articles about how that is good for stocks.  Historically it can be either good or bad.  There is always some rotation just before a bear market.  However, there are plenty of rotations that lead to higher prices.  It could go either way.  Hence the need for some patience to see how things shake out.

This is an interesting read.  Ultra-low Volatility #ThisTimeIsDifferent


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