An Early Thought

Markets are down this morning but let's remember a few things. 

1.  Year ends today for mutual funds and certain other partnerships.  This can have the effect of whipsawing markets as funds try to lock in gains or eek  out performance in the last day of their trading years.

2.  Market has had a huge run up in October.  This is currently going to be the best October since 1974!  There are a lot of people sitting on very large short term gains and there could be pressure to sell some of that to lock in positions.

3.  We are very overbought in the short term.

4.  Many averages are sitting right near their 200 or 150 day moving averages.  Expect to see some selling as these important resistance points are tested.

None of this takes away from my belief that markets will be higher by year end based on what we currently know as too many investors need it that way by December 31st.  However, we could see a bit of profit taking over the next few days or weeks as the market adjusts itself.