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Friday, December 21, 2012

Daily update 12/21

The market may be catching on that there will be no deal on the fiscal cliff.  Here is the daily SPX chart.

SPX tested the down trend line from above today and also the 18 SMA.  Volume was very heavy today, but it was quarterly expiration so that is normal.  Will the trend line continue to hold next week?  Lets zoom in to the 195 minute SPY chart.

SPY opened down way more then the gap from going ex dividend.  The last dividend gap was big relative the recent market moves.  Not so much now.  I think it is ok to continue doing the analysis on SPY going forward this time.  Last night I showed the price channel and asked if we were headed to the lower rail.  I guess the answer was yes, LOL.  Price opened below the channel line and stayed just barely below it at the close.  I have circled some high volume bars on this chart.  I noticed that when we have gotten a volume spike relative to the last few days, SPY has followed through in that direction.  I have a question mark over today's bar.  Was it a change of direction or just option expiration volume?   We will have to wait and see if there is any downside follow through next week.

I heard a Republican congressman interviewed this afternoon on Bloomberg.  I did not catch his name.  He was asked why they did not vote on the bill last night.  His response was that they could not get the votes because some people did not want to vote for a tax hike.  Seriously.  Didn't most people already vote for the bill that is causing one of the biggest tax hikes in history, LOL.  He also said he thought we were going over the fiscal cliff.  He said that the Democrats never wanted the Bush tax cuts in the first place and want them to go away.  Well duh.  I guess the Republicans are starting to figure out they have been outwitted.  I don't think the market will be happy about it.  It looked like the entire move up was on hope for a deal.  If that hope is dashed I think prices will reflect that.

The sector status page shows 8 out of the 16 ETFs have green weekly bars.  When we made the high in Sept. all 16 sectors were green.  The market has much less momentum now.


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