Slaying the Final Dragon of 2017

Despite more than enough excuses for a deep correction, the senior averages have, by and large, had a remarkably benign grind higher for much of 2017. 

As we come down the home stretch of this calendar year, with holiday trading kicking off next week, the latest round of bearish reasons for a selloff seem to cluster around the tax reform debate in D.C., stocks trading at a rich multiple, a too-crowded short volatility trade bound to unwind, North Korea tensions, Russia investigations, and recent weakness in transports, banks, large cap biotech, high yield corporate and junk paper, among others. 

With that list, one would think bears should get the selloff they have been craving for a good while now. 

But in the interest of staying objective we must also consider the scenario where a strong year with only benign pullbacks on the major averages closes out with a bang, rather than a whimper or a dud, meaning we continue to flex into New Year's Eve before possibly selling off, instead, in the first quarter of 2018 (see: end of 2004 into early 2005, for example). 

Beyond that, new growth leaders like GRUB ROKU continue to act very well and have shown no signs of relinquishing recent impressive gains on strong buy volume, especially Roku. And then, of course, we have AAPL AMZN FB GOOGL NFLX not yet giving any signs of hope for bears. 

As I write this, I see buyers are giving their usual morning effort to stabilize a weak open. We continue to key off $146 on the IWM ETF for the lagging small caps here for clues as to whether they will break down further under their 50-day moving average. Or, instead, perhaps they will stabilize and even rally to help the premier names in the market rally into 2018 to slay the final dragon of this year.