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Tuesday, September 26, 2017

Daily update 9/26

Mixed day.

The bulls showed up for a little while after the open.  However, the sellers showed up and started hitting the bids.  Nothing too serious, just persistent selling into strength.  The breadth was +55%.  New highs were stable again at 142.

 The futures got over the 20 SMA after the open, but once again failed to stay there.  The consolidation rolls on.

The lines continue to get closer together. 

SPX was unable to close back above 2500, but did not collapse either.  The sideways pattern of recent days looks just like the rest of the sideways patterns at the highs this year.  They always need a move down before taking the next leg higher.  The biggest difference this time is the slight weakness in QQQ.  It is below its June 9 intraday high.  History shows that very often QQQ leads SPX up and down.  I don't know off hand why it would be different this time.  We need to keep an eye on QQQ in case it breaks down from its multi month trading range.  Should that happen I would expect it to take SPX down as well.  Until that happens QQQ could end its correction at some point and resume leadership on the upside. 

The year 7 of a decade is famous for having a pullback in the 2nd half of the year.  Getting through Sept. does not mean we have avoided the pullback this year.  Back in 1927 the Dow made a new high in early Oct. and then dropped 10% that month.  Maybe we don't get that sizable pullback this year, but we will likely get something that gets the VIX high enough to push the market higher.


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