My Market Bias Is Shifting

 | Jun 15, 2017 | 2:16 PM EDT
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The indices are holding support and drifting back up but it is slow action and breadth is solidly negative with about 1,600 gainers to nearly 5,000 decliners. The number of new 12-month highs is below 100 while new 12-month lows are around 135. These are the worst internal measurements we have seen in a while.

I don't make big loud market calls but my market bias is shifting. I'm taking a much more cautious view and am positioning for further downside. I don't expect it to come easily but the combination of weakening internals, seasonality, the struggling FAANG names and the lack of leadership is pushing me to be more negative.

Ultimately my market posture is a function of my ability to find bullish "setups." I've been struggling with that for a while and see almost nothing I want to buy right now other than some plays for oversold bounces. If I see some good charts I'll buy them but the fact that I don't see many is causing me to put on some index shorts, too.

If you are holding some index shorts it is important to note that both the S&P 500 and Nasdaq 100 go ex-dividend tomorrow. All related securities such as the ProShares UltraPro Short S&P500 (SPXU) will drop at the open by the amount of the dividend (or 3x as the case may be). You will recoup the money but not until the dividend payment date, which is July 27. For money managers, this can be an issue because it may reduce their returns if they don't include a receivable for dividends they are owed in making their return calculations.

Just be aware of this accounting irritation. You are out the funds for a little over a month but the net effect overall is zero.

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