I Need More Proof of a Major Market Turn

 | Nov 14, 2017 | 10:52 AM EST
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The indices are struggling this morning as the first bounce attempt fizzled out -- even though there is no obvious news story to blame. Overseas markets were lackluster -- mainly due to some weak economic reports in China -- but this market isn't driven by news flow like that. What drives this market is unrelated to the headlines. It is primarily computers taking advantage of price movement.

The dip buying is so routine that it is likely there are some computer algorithms that are going to go to work when the dip buying stops happening. What we have to watch for are lower lows intraday and a weak close. That is what will cause the algorithms to move away from the dip buying programs.

We have had a number of weak mornings lately, but we are consistently bailed out in the afternoons. Early weakness never seems to gain momentum. The bears are very quick to believe that the turn is finally here when we have weakness like this morning, but they end up feeding the bounces that always develop later on.

I've taken a few stops on some positions and my long inventory is quite light, but I'm still not ready to load up on an index short. I am concerned about keeping my accounts as close to highs as possible and am not making any new buys right now, but I still need further proof that a significant market turn is occurring. A poor close today would be a key piece of evidence.

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