• Comments for January 17, 2018

     
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    Markets pulled back yesterday on a MF that was 400% higher than average volume. Late last week, markets broke out also on a MF that was 350% higher than normal. Hence, nothing really out of the ordinary here, except that investors seem to be nervous.



    The $SPX displayed the type of candles that you see at tops. Support is $2740.



    We can see below that the Money Flow closely followed the price in the past 10 days. Hence, yesterday's drop is not abnormal. Only the Cumulative Tick seems weak.



    Indeed, the Cumulative Tick seems to display a pattern that is similar to last November's pattern.



    Note below that both the small caps and the NQ8 Money Flow patterns do not seem to display divergences to price.





    The only divergences that I can see are in the Euro/US$ Figures, which indicate that a technical reversal is being traded now.





    The Yen doesn't show anything special: buyers push prices higher. This should favor lower equities though.



    The 10Y Treasuries display some very tiny buying signs, but the rest of the defensive sectors (REITs, Utilities) still show much selling.











    Conclusions:

    We are still two weeks away from the next FOMC meeting. The market still trades on the hypothesis that higher rates are coming. This issue acts as a natural support to equities.

    Wait and see for now.