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Wednesday, November 1, 2017

Daily update 11/1

Strong open was sold into.

Volume was elevated once again.  Breadth ended the day slightly positive, but at 10 AM it was +68%.  New highs increased to 204.  New lows were steady at 45 which is quite elevated with SPX hitting a new high this morning.  It did not close at a new high though.

The futures popped out over the top of the channel this morning, but came right back in.  That usually means a trip to the lower channel line is coming up.

The green count slipped today instead of building on yesterday's gain.  We still have a negative cross, but both lines are below 50.  The bears have been unable to take control so far.

I find it interesting that volume has been elevated since 10/20 when SPX closed at the yearly R2 pivot point.  SPX has been able to push slightly higher, but it has been a struggle.  There appear to be more sellers here then we have been seeing at the highs in a long time.  Will they keep going and eventually overpower the bulls?

The increased volatility in IWM was apparent again today.  I believe it is related to the market's feelings about tax cuts.  We were told there would be a tax plan from Congress today and IWM shot up.  Last night they delayed it until tomorrow and IWM gapped up more this morning.  However, they started covering more about what was going on in DC on CNBC and it looked to me like they were a long way from getting an agreement by tomorrow.  Next thing I know I looked over at IWM and it was heading south fast.  I have been a bit puzzled why the clear dysfunction in DC has not bothered the market in the least.  I don't know if it will in the future, but the action in IWM could be a sign it might.  It is too bad our political leadership has never heard of the philosophy or under promising and over delivering.  They sure are good at doing the opposite.

Today at the lunch round table on CNBC it was said we have a perfect storm on the upside for stocks.  There is synchronized global economic and earnings growth.  Josh Brown was trying to give a scenario that could cause the market trouble and the rest of the gang wouldnt't even let him finish.  The bulls berate anybody that might be even a little bit cautious.  That phenomenon is almost always reserved for bull market tops.  We have seen that for months now.  No telling how much longer it goes on, but we clearly have the sentiment in place for a bull market top.  The market is a discounting mechanism and the rally up to this point was discounting the currently good global conditions.  Is this as good as it is going to get or is the a lot more to come?


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