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Monday, December 4, 2017

Daily update 12/4

The rotation continues.

Four days of heavy volume.  Kind of an odd pattern.  Breadth was +73% early on, but ended just slightly positive.  New highs were strong again at 283.  New lows remain elevated at 26.  Tech was weak again while retail, financial, and basic materials stocks were strong. 

The futures closed back inside the channel ending the accelerated up move for now. 

The green count slipped a bit, but remains above 50.

HYG still hasn't righted itself yet as it remains below its 200 SMA.  This could be in the process of making a higher low or a retest of the original low.  I can't really tell.  If HYG ends up making new lows and continuing down it would be something that could alarm some investors.

European and Asian indexes have not recovered to new highs from the bout of selling we saw in Nov.  Since the global de-risking has not happened for a few days now it could be over.  However,  global markets have not really recovered all that much.  I don't know if the sellers are truly done or not. 

There is clearly some portfolio adjustments being made with the volume and intraday volatility picking up.  It is unusual to see so much volume as SPX is making a high.  Stocks with higher tax rates are being bought and those with low effective tax rates are being sold.  This does not look like a lift all boats scenario now.  I think that part has already happened.  The first two weeks of Dec. often see some consolidation or minor pullback anyway.  The last two weeks are usually where the gains for the month reside.  The COMPX is clearly showing relative weakness again similar to what happened back over the summer.  I don't know if this is just another short term rotational move or something more meaningful. Tech stocks could bottom around here and be off to the races again.  If they continue breaking down there could be repercussions for the broad market.  Too soon to tell.


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