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Thursday, October 12, 2017

Daily update 10/12


SPX gapped down a bit this morning.  It found its low pretty quickly and rallied to .09 above yesterday's high.  There it stopped in its tracks and started waffling around.  About 1 PM TLT started rallying and proceeded higher all afternoon.  Around 2:30 PM SPX started down and made a new low for the day before bouncing a bit into the close.  I did not hear mention of any news that could be tied to the moves exactly.  With bonds moving first it suggests a move to safety.  Maybe some stock guys noticed the move in bonds and started selling stocks.  I don't know if the move was significant for sure or not, but notice the big increase in volume today.  It may be nothing, but it could be a sign of some more serious profit taking then what we have seen in a while.  That would more likely to be true if there was no news that caused the activity.  If it was caused by valuation at 2550 it could signal the long awaited pullback might be ready to start.  Breadth was dead even.  New highs picked up a bit to 197.  New lows also picked up to 31 and are clearly elevated since SPX made a new intraday high.

The futures finally closed inside the channel this morning confirming what we already knew that the accelerated up move was over.  They have traded sideways long enough for the channel to catch up to price rather then pulling back to get inside.  That is a bit unusual.  Very little selling pressure up til now.

The green count slipped a bit today, but remains above 50.  The bulls lack enthusiasm, but so far the bears have not made an attempt to take control.

The short and intermediate bull pressure lines are showing a waning of buying pressure this month.  The long term line looks strong based on the activity shown in this chart, but the .54 level is not particularly strong and could reverse to negative fairly quickly if any real selling pressure showed up.

The other day we saw what looked like a clear rotation from stocks to bonds.  Today saw buying in bonds and selling in stocks, but the timing makes it unclear it was specifically rotation.  It still could be though.  We can't rule out a big fund doing the rotation.  Sometimes these moves start with a well known investor and others figure that out and just follow along.  It is possible somebody decided 2550 was a good place to take some money off the table.  We need to keep an eye out here for the next several days to see if similar activity continues to happen.  It could turn out this is an important change for the market, but too early to tell.  It is possible this action will turn out to be insignificant and could already be over with.  I will keep my eyes open and we will see what happens.  In the mean time I still have my eye on the 2540 level.  If we do get a pullback soon it will be important to see what happens to QQQ.


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