The correction has begun with the uneasiness of the two political scandals surrounding Trump – Russian meeting and now a Comey memo saying Trump asked him to kill the investigation into Flyn. The first is not really an issue legally, but the second could fuel the quest to impeach Trump which is really led by McCain and Graham behind the curtain in league with Schumer. McCain is already calling this a Watergate demonstrating he is out to get rid of Trump and protect the establishment.
The impeachment of Trump is being talked about behind the curtain as a positive move for then Pence would take up the Presidency and then the tax reforms would become possible. That is an interesting twist on things.
We are showing choppiness for three months and big volatility its in August. The likelihood of getting any tax reform now before the August Congress holiday is fading very fast. This is taking the icing off of the Trump rally. Forget the infrastructure expenditures for that is matching funds and states will just raise taxes for that one which is detrimental not bullish other than from the companies who will overcharge government fix stuff.
The Daily Bearish Reversals in the Cash S&P500 lie at 237900 and 234450. A Weekly closing below 233500 will tend to warn a serious correction becomes possible.
The fact that the Dow has been unable to make new highs and the Global Market Watched on the monthly level labeled April when it closed for the month as IMPORTANT HIGH. Our Capital Flow Models models are showing that there has been some European selling of equities, which is the reason the Dow has not followed the S&P500 or the NASDAQ. There has been a flight to quality moving into the US Treasuries, but also the hot money has been selling the dollar after the French election. Here we still see a Weekly closing below 20000 will confirm a more serious correction. The Daily number remains at 20204.
The NASDAQ shows a daily closing below 610750 will signal that a temporary correction is possible.A Weekly closing below 580500 will confirm a serious correction is possible.
The Global Market Watch classified the April high in the Dow as a Possible Important High. That should not be ignored. If May closes lower than April at month-end on these three indexes, that will confirm the correction. We do see the possibility for the correction to extend into 2018 from which a slingshot to the upside remains probably.