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Friday, August 25, 2017

Daily update 8/25

More down to come?


SPX stuck its head above the 50 SMA this morning.  However, around 10:30 QQQ was smacked hard and it took SPX down with it.  This was the second attempt to reclaim the 50 and I have to wonder if it wasn't the last for now.  Breadth was strong at +64%.  Money rotated out of the biggest of the big caps into smaller cap stocks.  New highs picked up a bit to 109.  New lows dropped down to 20.


Last night I mentioned the bulls usual trick of rallying the futures over resistance overnight.  They tried that, but by the open the futures were barely above key resistance.  They ran up a little more to the 50 SMA, but the sellers were waiting.  This looks like it wants to go lower to me.


The green count crossed above the red line today.  You might recall how after a long period of the green count being above 50 a cross below the red line often brings out buyers.  The same thing happens in reverse we just have not seen this in a very long time.  Today's positive cross by the green count could bring out the sellers on Monday.  With the intermediate indicator already below 50 a sizable decline is possible.  That does not mean it will happen, just that it is possible.

Things have clearly changed.  Strength is being sold into unlike what has transpired so far this year.  To get a big decline people have to be willing to sell into weakness.  We don't know if they will do that or not.  Up til now people have been reluctant to sell for fear of missing out.  With the way QQQ has been getting whacked intraday I am not sure that is still true.  I keep wondering if the market is losing patience a little bit with the goings on in D.C.  Unfortunately I have no way of knowing if that is the case or not.  If we end up going a lot lower that is likely the reason why.  Too bad we can't use hind sight in the markets. 

Don't you just love these huge stadium monitors.


Have a great weekend.

Bob

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