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Tuesday, October 24, 2017

Daily update 10/24

A bit of a rebound.

The market gapped up and after pulling back a little it rallied some mid day.  There was some afternoon selling though.  Interesting volume.  CAT and MMM had huge volume today on earnings.  That helped the Dow a lot more then the other indexes.  Breadth was +51%.  New highs were stable at 201.  New lows remain very elevated at 52. 

The futures bounced a little of the 20 MA, but not with any vigor.  There is still a risk they fall through.

Both counts picked up a bit today.  The green count is still above the red line.

It is normal for a bounce after a key reversal down in SPX.  It is really what happens going forward that counts.  A close below yesterday's low (2564) could bring out some sellers.  If SPX gets convincingly up through 2575 we could continue higher.

Politics may be heating up.  Some GOP senators seem to be taking Trump on.  Personally I think the market has discounted some tax cuts already.  I hear a lot of people say otherwise, but nearly everybody interviewed expects they will get done.  If that is the case how can the market not have already priced them in.  I think that is the key reason we are here.  I have had my doubts since about March that they would get anything serious done in D.C. this year.  If they squabble enough to make others start to doubt they will get tax cuts done the market might sell off some.  All I have heard out of D.C. this year is a bunch of empty promises and nothing concrete.  I don't really understand how so many people are so sure they will get something done.  They say tax cuts unites all republicans which I am not sure is true.  I suspect many hard working folks don't care if businesses get a tax cut.  From what I have seen so far the changes for individuals do not seem to benefit the middle class much if at all.  They definitely benefit the more wealthy among us.  That could be a hard sell.  Driving up the deficit is very divisive.  Tax cuts that greatly increase the deficit will also be a hard sell.  I don't have any idea how this will work out, but I think it could have a big effect on stock prices.


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