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Monday, October 9, 2017

Daily update 10/9

Today's gap up attracted sellers instead of rally chasers.

Volume was pretty light the last two days.  Breadth was -52%.  New highs were stable at 184.  New lows increased a bit to 22 and are starting to get a little elevated this close to the highs. 

The futures ended the trading day just above the upper channel line.  They are currently inside the channel.  Should they still be there tomorrow morning it would indicate the accelerated up move is over and a consolidation phase has begun.  I believe that is the case because we tested Thursday's high today and sold off.  A close back inside the channel would be confirmation though.

The green count took a bit of a dive today, but remains above 50. 

They are still parading traders on CNBC proclaiming tax cuts are coming even if it is 2018.  I have to wonder if they are just saying that to keep people buying or if they really believe it.  I do not see where the legislature has done anything that would convince me they can handle a tough issue.  I do not like the tax plan as it was proposed and I don't think it has any chance of passing.  We keep hearing promises that work is being done in congress, but we have yet to see any results.  There may be room for some disappointment in the market if investors decide it is not going to happen any time soon.

Earnings will start trickling in this week.  Some of the big banks report later in the week.  Obviously the market has priced in high expectations.  Whether those expectations will be met is the question.  Last earnings season saw somewhat lackluster trading after a meet or slight beats of expectations.  What happens this time?

QQQ was slightly in the red today.  It is still unclear whether this latest break out will stick.  Market internals are weakening slightly, but as long as SPX stays above 2540 there is not much hope for bears.  I suspect investors will be looking at the earnings reports with great interest this time.  Is the market fully priced or not?


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