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.