Stock Market -- Aug. 1 -- Nov. 1

History shows that the period of August through the end of October can be volatile with no shortage
of price corrections and even a couple of crashes (1929, 1987) thrown in. It is a period when market
players critically assess what their year may look like and are also forced to look at the next year
more seriously. It has also been a time when the Fed tightens the reins on liquidity ahead of the
typical holidays easing interval toward year's end.  Seasoned investors know the history and are on
heightened alert. As well, it is a time to plan portfolio and rotational change for the following year.
So, you may find plenty of cautionary market commentary from fundamental and technical sources
show up in you in-box. For all I know, the market may skate smoothly right on through this period,
but I plan to showcase it weekly to avoid boredom from taking further hold.

Now there are contentious political issues ahead, including raising the debt ceiling, trying to settle
on a budget and the possible introduction of tax reform legislation. Tax reform could be a plus if
tax cuts come into play, or a bust if talks do not even start in the Congress or fail when they do.
Moreover, as autumn wears on there will be Fed behavior to study and speculation about who, if
anyone, might replace Ms.Yellen as chair. Finally, the Mueller investigation of Russia / Team
Trump is moving into probable cause territory with two grand juries now open for business.

I will focus on two charts. The first is the Value Line Arithmetic price chart, an unweighted index
of over 1700 closely watched issues. Secondly, comes the NYSE cumulative advance / decline
line.

The Value Line ($VLE) is trending up but has lost substantial momentum since early in the year.
The weaker positive action reflects the potential for slower economic growth over the rest of
the year which is also reflected in weekly forward looking economic indicator data. This index
is holding its positive trend line from early 2016, but just barely.  VLE Weekly

The NYAD is in a second wave up from Feb. '16. It has lost momentum this year, but is stronger
than the VLE. This suggests investor preference for large cap stocks. The VIX is shown in the
bottom panel of this chart. It is in the low end of the historic range, and we'll see how it fares
over the Aug. / Oct. period.  NYAD Weekly