Breadth Is Better on Quiet Market Day

 | Oct 31, 2017 | 4:27 PM EDT
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We had a weak finish to an uneventful day. The most notable action was a reversion to a very tight trading range. Volatility has picked up since earnings season started, but it was quiet today as we await a couple of reports later in the week.

The other notable action today was the improved breadth. The market has been struggling with poor breadth, although the Nasdaq and DJIA have been doing well. Today we had good breadth and better action in the Russell 2000 ETF (IWM) , which made for a much better tone of action.

Semiconductors and Intel (INTC) and Micron (MU) were the leaders today. This was largely caused by Apple (AAPL) , which is dumping Qualcomm (QCOM) as a supplier. Apple itself was a big boost to the market as it climbed for the third day in a row on increased optimism over the iPhone X.

As I discussed in my prior note, the House tax proposal is scheduled to be released tomorrow. It would not be a big surprise if the announcement was delayed as the negotiations are ongoing.

The market has not had big reactions to news events like this for quite a while, but I'm looking for this announcement to shake things up and create some increased volatility. The potential for business-friendly tax policy has been the foundation for much of the rally since the election and it will be easy to disappoint a market with very high expectations.

Technically, the upward trend continues. The bulls are slowly steamrolling the skeptics and the worst thing you can say about this market, from a technical standpoint, is that it is extended and needs a rest. That is not a good reason to be bearish.

Have a good evening. I'll see you tomorrow.

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