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Friday, November 17, 2017

Daily update 11/17 The Flames Went Higher

Gap down, stay down.  Possibly option expiration related.  Maybe the rally continues on Monday.

After a starting gap down the market stayed in a fairly narrow trading range.  Breadth was strong at +60%.  Small caps were strong all day.  Big caps were taking a break.  New highs were 102.  New lows dropped down to 26.  SPX held above the 20 SMA.

The futures held above the 20 SMA until after the close.  They still have not hit the upper channel line target. 

The green count rose a bit more today, but remains below 50.

I think today might have been about option expiration.  We will see if the bulls come back on Monday.  Europe was down while Asia was mostly up.  There was some volatility in one China index.  Japan was up a good bit early on, but surrendered a lot of the gains by the close.  I don't see any clear signs this global de-risking thing is over yet.  If the sellers come back next week I don't know if the U.S. dip buyers will be as anxious to load up.  I have questions with no answers at the moment.

I don't generally talk about the infamous Hindenburg omens because they happen a lot more then the big moves down they are supposed to predict.  However, this chart caught my eye.  The Flames Went Higher

Notice the red line crossing above 20 has led to corrective activity as in 2015 or full bear markets as in 2000 and 2007.  Only 2007 was higher then what we have now.  It looks like SPX does not seem to go much higher after crossing 20 even though the downside is not necessarily immediate. Will it be different this time?  The sample size is rather small, but still this could be significant.

Have a great weekend.


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