It is as if nobody wanted to buy the tax deal news - which had been known for days - but as soon as algos detected liquidity they could not buy fast enough. Note that intraday buyers sold in the last 30 minutes.
Early in the day, the NQ8 weakness was attracting money, while the NQ100 did not move much in terms of Money Flow (The NQ8 and the Small Caps Real-Time Money Flow Are under test right now. Not available yet to RT subscribers.)
The most impressive move was the small caps which broke out. For now, the move looks much weaker than the breakout that the Trump election triggered. The tax deal news had been much anticipated by the small caps. Who is left to buy small caps while rates are moving higher?
We can see that IWM is now in exuberance territory (The IWM/SPY ratio closed well above the envelope).
On the other hand, the Real-time small caps Money Flow does not show the same type of exuberant move.
The US$/Euro shows some divergences, which point to a possible trend reversal.
Conclusions:
Yetserday's move was entirely triggered by algos, which bought as soon as liquidity was detected. This liquidity was probably triggered by continued higher rates differentials and some repositioning from US Treasuries.
The real question is related to interest rates: The Fed is officially hawkish while Trump's tax deal needs to be financed through new bonds. Everything could push rates higher much quicker than expected.
