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Tuesday, July 18, 2017

Daily update 7/18 Max intra year drawdowns

Dip buyers came out to buy the little dip early in the day.

Rally chasers did not show up so no forward progress was made.  Breadth was slightly negative.  New highs dropped a good bit to 116.  New lows increased again to 22.  That is not a particularly good sign.  New highs in July always seem to struggle and usually the market ends up falling back.

The futures dipped inside the channel this morning, but the dip buyers pushed it back out.  The bulls will have to push price higher tomorrow or we are likely to end up back in the channel.

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

The bulls are still buying dips.  However, they still have not answered the question whether they are willing to push price with the VIX below 10.  During the tech sell off IWM, XLF, and IYT seemed to be catching the money.  During this tech rally IWM, XLF, and IYT have been lagging behind.  Reverse rotation.  That does not seem thought out very well.  Is the market saying oops I made a mistake?  This seems like indecision by the market.  QQQ has nearly made it back to its high and so far no sign of sellers.  However, now that QQQ is back near the high it is decision time.  Will buyers keep on coming to push it higher or will profit takers show up?  In the short term market internals are all positive.  I think the bull case would be stronger if IWM, XLF, and IYT were going up at the same time as QQQ.  This is money moving around the market rather then fresh money coming in.  It takes fresh money to push it higher.

This is an interesting piece of historical data.

So far we have the second lowest drawdown ever.  However, the year is not over yet and the FED is getting ready to start shrinking the balance sheet. 


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