There is increased market volatility as tax bill makes progress and investors contemplate a number of changes. Most notably the corporate will move up to 21% while the top individual rate will drop to 37%. There are other changes involving things like the Alternative Minimum Tax, but at this point the Republicans are anxious to pass any bill.
There are a couple of Senate holdouts on the Republican side so we can still rally a few more times when they finally give in and agree to the bill.
The market is acting like it is starting to anticipate a 'sell the news' reaction to the bill at this point. The spike that was caused by a headline that the bill was close to done was sold this time and the indices are in the bottom end of the intraday range.
Due primarily to outperformance by small caps, breadth is quite strong at around 2 to 1 positive. There aren't that many big movers and no real compelling themes but there is plenty of green in a mix of stocks. The FAANG names -- Facebook (FB) , Amazon (AMZN) , Apple (AAPL) Netflix (NFLX) and Alphabet/Google (GOOG) , (GOOGL) -- are mediocre and there is concern that the rotation out of groups like semiconductors and biotechnology may pick up some steam.
The FOMC announcement is coming up soon and as I say so often, the market loves to love the Fed. The rate hike is already baked in but market players will be looking for hints about the number of hikes in the year ahead. Right now it is expected that there will be 3 hikes in 2018. If that doesn't change I expect the buy buttons to be hit.
My gut feel is that the increased volatility is signaling that more dramatic market action is on the horizon. It is important to be ready for some fast moves in both directions.