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Wednesday, August 9, 2017

Daily update 8/9


The market gapped down, but failed to fall apart.  Breadth was -67%.  New highs plummeted to 65 while new lows shot up to 90.  That is the first time there were more new lows since 7/6 when SPX was testing its 50 SMA.  This is the second day off hitting a new high intraday rather then a few weeks off the high as it was then.  I don't think that is a good thing.

The futures tested the lower channel line overnight and bounced during the day.  They even closed above the 20 SMA.  I guess the question is will they continue higher from here.

The red count picked up some, but remains below 50.

The short and intermediate bull pressure lines are negative.  The long term line is barely positive and could change quickly if the market continues down.  We have been here before this year and the market refused to go down.  Will it be different this time?

The bears are attempting to get control of the market again.  Since the Feb. 2016 low they have not had much success for very long.  This is certainly the weakest looking technical position at the highs since the 2015 top.  Maybe the bears will succeed this time.  IWM was down nearly 1% while SPX was nearly flat.  That suggests some rotation out of small caps and into higher quality stocks.  IWM has been relatively weak lately anyway.  I don't think this is a good thing.  That looks like a defensive move to me.  People on CNBC were happily saying the market was shrugging of rising global tensions.  I am not sure that was true.  TLT and GLD had very good days along with the move out of small caps.  Just because the market did not panic today does not mean it is ignoring the situation.  I think we need to keep an eye on things and see what happens.  It is possible we see more downside to come.


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