What we can see below is that NQ8 investors were very reluctant to buy weakness yesterday. This tells us there might be an issue brewing for the NQ8 sectors: investors might continue to book profits.
As we can see below, the NQ100 MF was slightly stronger. This is a sign that index investors are still buying dips.
A similar move appeared in small caps, which were showing a positive divergence early in the day.
Of course, on a longer-term picture, yesterday's bounce was almost imperceptible. The key point here is to take note of the short term dynamics: index investors and buying the dips while the NQ8 large investors are cautious.
The energy sector was slightly weaker yesterday, but not as weak as the oil drop would have predicted.
Conclusions:
Yesterday's piece of information is that NQ8 large investors were somehow afraid and hence did not buy the bounce, while index investors continued to buy eagerly.
Overnight, the markets are gapping up on the expectation that the Senate budget vote is a clear first step for a tax deal before year end. This gap up will also carry good information: we will be able to see whether large investors are buying or selling the gap. Options expirations might blur the analysis though.
It will be interesting to also see whether the overnight gap-up in US$ and gap-down in the 10Y Treasuries will be strong enough to revert the large players' most recent moves (Sellers of US$/Buyers of US Treasuries)
Today it will pay to study the markets.
