One day after an active session reacting to news, the market drifted lower on Thursday as we awaited further develops on the Republican tax-reform proposal now before Congress. News that there were still issues with the deal caused some pressure, but most market players are confident that reform will eventually get done.
The indices had become a bit overbought recently, so a pullback and a little consolidation actually looks healthy to me. It's unlikely that tax reform will get done on Friday, but since expectations for a deal are so high, traders will likely be positioning for the possibility of an agreement happening over the weekend.
I'm concerned about potential catalysts after a tax bill gets done, but that should be offset to some extent by the positive seasonality that we historically see heading into the end of a year. End-of-year action is often about things other than fundamentals and news, so there are usually some good opportunities. We just have to keep looking for them.
There isn't much news expected Friday. We're heading into peak holiday-party season, so I'm not expecting anything major to occur. The potential for a tax bill is going to give us support, so I don't expect the bears to create much pressure even if the action is slow.
Have a good evening in the meantime and I'll see you tomorrow.