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Tuesday, October 2, 2018

Daily update 10/2

Bulls tried again, but failed.

SPX got fractionally above the FED day high, but found resistance again.  Breadth was -58%.  New highs dropped way down to 41.  New lows were stable at 142.  Again, not good.

The futures tested below the 20 SMA overnight, but bounced significantly off the low before the open.  There was a sharp late afternoon sell off that took them back to the 20, but they bounced going into the close.  They seem to be stuck between the 20 SMA and the FED day high.

The red count is creeping closer to 50.

Small cap stocks were hit again as R2000 was down over 1%.  The transports were also down over 1%.  The strongest sector today was utilities as XLU was up 1.37%.  A defensive sector leading on the upside is not the most bullish sign in the world.  This was the fourth day of closes within the range of the FED day.  The market looks like it is undergoing a pretty massive defensive rotation.  Out of small caps and into the biggest of the big caps.  That is holding the Dow, SPX, and COMPX up for the moment.  I am not sure I have ever seen anything quite like this.  For now we wait until the FED day range is broken on a closing basis and take it from there.


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