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Late selling spoils early gains

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After a mostly positive morning and early afternoon of trading, stocks took a little dive into the close with a last hour sell-off. The trading range wasn't all that wide and volume was light again, and neither bulls nor the bears have been able to gain much traction. The Dow lost-13-points on the day and the S&P and Nasdaq also closed with minor moves. The Transports and small caps had modestly good days as they both battle some support lines after recent pullbacks.


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Once again it is a tug-o-war between sectors as energy and retail continues to slide, while healthcare and biotech got a bounce from the release of the Senate healthcare bill. So while we continue to see a choppy market there is movement under the surface. It's just not all moving in the same direction.


The SPY (S&P 500 / C-fund) rallied early but some late selling took the indices off their highs and closer to their lows. On this chart it could be considered a negative reversal day, but volume was very light and the day's range was pretty narrow, so I wouldn't put too much weight into that. The big question is whether the bottom of that rising channel (also an F-flag) and the 20-day EMA will hold and we see a push toward the top of the channel again, or if that F-flag will break to the downside as they often do.




The DWCPF (S-fund) was up modestly on the day as it tested and held at its lower end of the flag. This could be a bull flag here but that support must hold here.




The major small cap index, the Russell 2000, shows a fairly distinct new short-term downtrend, but a case could be made that it is a bull flag that may be ready to break to the upside. To make things more interesting, today the Russell 2000 will rebalance its components and it will eliminate some and gain other stocks into the index. That should produce a massive spike in volume, but I'm not sure what that will do to price.




The Dow Transportation Index had a good day on Thursday, holding again at the 20-day EMA but that 2310 - 2320 area is also acting as resistance so something is going to have to give soon.





The EFA (EAFE Index / I-fund) was flat and continues to move sideways since breaking down from the rising trading channel.




The AGG (Bonds / F-fund) was up slightly and is making a push to move to new highs if that 110 resistance area doesn't hold.





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Thanks for reading. We'll see you back here tomorrow.

Tom Crowley


Posted daily at www.tsptalk.com/comments.php


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S&P500 (C Fund) (delayed)

(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)

(Stockcharts.com Real-time)
EFA (I Fund) (delayed)

(Stockcharts.com Real-time)
BND (F Fund) (delayed)

(Stockcharts.com Real-time)

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