The 20DMF displayed a negative MF that was twice as strong as usual.
This was mainly due to a weakening of the 10Y yields, which also pushed the US$/Yen lower, somehow reversing the flow of money.
Will this down move continue? It basically depends on the marginal buyers. If buying liquidity dries up, for sure algos will stop buying the dips.
However, for now, index investors are not selling.
We can also see that the Cumulative Tick is not really weakening. At least, it is not as negative as in August or September.
Of course, panic selling could appear on ETFs and on the Cumulative Tick, but this is not the case for now.
The only non-positive is that the small caps did not attract money yesterday. But they might easily bounce from here, as algos have been programmed to buy the markets when they detect some slightly positive money flow.
Conclusions:
I am still very bearish on a high valuation/higher rates combination. However, liquidity is not been drained out for now and this is basically what matters in this market.
I would be very surprised not to see buyers coming in after early morning weakness, but I doubt very much that this market can break to new highs unless we get Fed or Tax related news.
