Care for a Dip?

 | Nov 07, 2017 | 1:31 PM EST
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Stock quotes in this article:

IWM

,

QQQ

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aapl

The market has been so consistently positive recently that even minor weakness elicits some quick bearish comments. Much of it is in jest, but when you are used to such lopsided action for so long it doesn't take much downside to make it feel like there is a major change developing.

A little bit of weakness is more a positive than a negative. Many buyers have been sidelined because they simply refuse to chase this market any higher. The discipline of many fund managers is to try to reduce their cost basis in their favorite names. There has been much opportunity for that recently.

The flip side is that many bears are very quick to proclaim that the turn they have long been predicting is finally here. They want to believe that the downside is going to come as quickly and as unrelenting as the upside, so they extrapolate from minor weakness like we are seeing today.

There are some oddities in the technical action. The Russell2000 ETF (IWM) has been in a trading range since the first of October and if it closes near the lows of the day it will breach some support levels. The Nasdaq 100 ETF (QQQ) is hardly reacting, primarily because there is still some big cap strength. With Apple (AAPL) still green the indices are going to hold up pretty well.

We'll see how we close but this is looking like just another short lived dip. It is interesting that tax policy negotiations are producing some reactions, but it is going to take a few ugly closes to put the fear of the bear into this market.

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