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Ready for launch or one more gap to fill? – TVO MB 3-27

The rough ride of the end of the month (and end of quarter) profit taking got a bit rougher on Wednesday, as markets logged another distribution day after last Friday’s “yield curve” scare. Overall volume rose in what was decisively a win for the bears this time around, and the chances of a SPY 275 gap fill just went up a notch.

When distribution days start to rack up close together, the struggle between the sides becomes a bit more real. Enough chinks in the seemingly impenetrable bull armor will eventually cause the fabric to give way, so bulls may want to exercise some caution.

They may also want to exercise some patience, because these periods of concentrated distribution are almost always right before the most tremendous buying opportunities (Remember last December, anyone?).

GDP may save the day on Thursday, or maybe not, but either way our Heat Gauge has called for another SIDEWAYS DOWN day, so keep your seat belts fastened. -MD

Sentiment: EAGER – Markets are in accumulation mode and big institutions are buying at a slow and steady pace.

Volume: 6% – Today’s volume was higher than the previous session.

Real Feel: SWELTERING – Bears were in control of the session with a slight trace of buying under the surface.

Cycle: BULLISH I – Retail investors are confident and slightly overweight in their holdings.

Portfolio: BUY – The market is healthy and it’s a good time to contribute to long-term investments.

Next Day Move: SIDEWAYS DOWN - The probability that SPY will close positive in the next session is 52%.

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