Comments for September 15, 2017

The overnight NK missile was at once discounted by the market as it is now clear that the Trump administration has no way of preventing NK from using its toys. Trump can complain to Russia and China about their kid's disruption activities in the neighbourhood, but parents have already cut pocket money. Nobody really wants to spank a hyperactive kid in fear of an all out eruption of bad behavioral activity. So the best is to keep him shouting within his own bedroom as far as he does not throw stones and smashes neighbours' windows.

The NQ100 displays a positive divergence: investors are buying weakness since the big tax deal will greatly help the largest NQ100 companies.



Even index investors (SPY/QQQ) are buying here.





Small caps are slightly overperforming (shorts covering activities), but we are still way below the top of the ratio's envelope.



Investors sold Treasuries yesterday (Tax deal behavior.)



On a longer time frame, excess reserves have continued attracting money. This is a negative if we look at the available liquidity.



Conclusions:

Next week is the QE announcement followed by the Tax deal that needs to go through Congress.

as a side story, MS announced that its revenues from trading transactions would fall by 20%. if this is the case, small stock brokers should also feel the same pain.