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Wednesday, October 17, 2018

Daily update 10/17

 Pause day.

The morning saw a sizable retrace of yesterday's rally.  However, the dip buyers stepped in and sent SPX above yesterday's high.  However, there was clear resistance there the rest of the day.  Breadth was -61%.  That was pretty negative considering the size of the move in the major indexes.  New highs were 14.  New lows picked up a bit to 124.

The futures stalled after crossing the 20 SMA.  No confirmation of a break and the MA is sloping down pretty sharply.  The bulls need to hold the market up again tomorrow or there is some risk the bounce rolls over.

The red count barely moved today.

We had resistance at yesterday's high today.  Whether it is insurmountable or not I do not know.  During this mornings sell off the breadth was -79%.  That is awfully high after a strong day like yesterday.  The rally pared that down considerably, but clearly investors were happy to sell a broad number of stocks today.  I would think the volume climax selling we had last week would allow the market to go higher from here before we head back down for the retest.  It might be a bumpy ride though.  We also need to be cognizant that the market could decide to roll back over at any time.

Interesting bit of research I saw today from Urban Carmel.  This Isn’t The Start of a Bear Market
One interesting fact for our short term situation was in there. 

SPX has fallen 3 weeks in a row, for the first time since June 2016. Since 2003, SPX has fallen 3 weeks in a row more than 20 times, and all eventually retested or exceeded the low, at least intra-week. This almost always occurs within the next 3 weeks but in 2004 and 2015 it took 6-7 weeks to occur 


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