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T3’s Market Wrap: It Doesn’t Get Tighter Than This

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Stocks took a minor break today as traders digested what remains an active news flow.

President Trump announced an executive order intended at beginning the process of repealing and replacing Obamacare.

According to Trump, this will lead to expanded association health plans, increased competition, and access to more healthcare options.

He also said the order will cost the government “virtually nothing.”

Healthcare stocks, including insurance and drug/biotechnology names, aren’t seeing much reaction. I guess that’s because they were doing fine both before and during Obamacare, and presumably they’ll do nothing after.

He also said “massive tax cuts” are on the way, though the timing and magnitude remains unclear.

The SPXDow Jones Industrial Average and Nasdaq Composite subsequently hit record highs before turning lower to finish slightly red.

The SPX finished down -0.2% at 2550.93, with the other indices showing similar losses.

Bank stocks were weak today after JP Morgan (JPM) and Citigroup (C) reported earnings.

Yesterday, the Fed’s meeting minutes turn out to be more dovish than expected, which has traders worried about the pace of future rate increases. Higher interest rates mean higher profit margins for banks, so banks tend to weaken when traders expect lower rates.

It feels like we’re stuck in a holding pattern.

For the past 5 trading days, the SPX has been stuck in an extremely tight 14-handle range, and now everyone’s wondering if we’re about to see a breakout higher or the first real breakdown of 2017.

This morning, T3 Live Chief Strategic Officer Scott Redler said “as long as we hold 2540ish, we can stay the course.”

With the SPX holding above Scott’s outlined 2540 support level, it looks like the bulls are still winning.

When that will change… no one knows.

The VIX hit 9.65 this afternoon, which means we can extend the statistical streak we’ve been tracking.

Since October 2014, when the CBOE changed the VIX calculation methodology, the VIX has been under 10 on only 57 days.

And we’ve had 19 in a row.

So we’re either looking at a new normal of incredibly low expectations for volatility, or the crowd has gone mad.

One piece of data that’s getting a lot of attention is the weekly survey from the National Association of Active Investment Managers, which shows that money managers are more than 90 percent long the market.

Here is a chart from Bloomberg so you can see the data:

Just be aware that we’ve seen countless signals of super-bullish sentiment this year and not one has market the top… yet.

Bitcoin hit new all-time highs above $5200 today on heavy activity in the rumor mill.

There is chatter that Goldman Sachs (GS) could start a Bitcoin trading desk.

Plus, there’s a rumor circulating that Amazon (AMZN) could discuss Bitcoin on its next earnings call, though I can’t emphasize enough that there seems to be no real evidence for this.

However, I wouldn’t rule out Amazon accepting Bitcoin for payment at some point in the future. Amazon has proven to be willing to do just about anything to gain market share, and accepting cryptocurrencies doesn’t seem unreasonable.

 

 

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