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Tuesday, June 6, 2017

Daily update 6/6

A little more down.

It was another narrow range day despite the gap down.  Volume picked up a bit from yesterday though.  The breadth was -52%.  New highs dropped again to 108.  New lows increased again to 49.  That many new lows this close to the highs is not normal. 

The futures came back inside the channel indicating the latest thrust is over. 

The green count slipped a bit more today, but remains above 50. 

The dip buyers came in to buy the gap down.  SPX closed the gap, but could make no further upside progress.  During the last hour the market sold off with QQQ leading the way.  I heard rumblings of a sell program in the FANG stocks.  Apparently some big player was taking profits.  The question is will others follow suit?  Bob Pisani reported today that 5 companies (FB, AAPL, AMZN, MSFT and GOOG) make up 43% of the NDX 100 index.  That means QQQ is far from a diversified index.  If some of the big players start taking profits the broad indexes could get hit harder then people expect.  It is not normal or healthy for such a small number of stocks to have so much control over what is supposed to be a fairly broad index.  That kind of thing can only happen in a bubble.  Whether it is now or later those stocks will correct.  Now that investors have piled so much money into passive index funds it will be widely felt when it happens.


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