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Monday, September 23, 2013

Daily update 9/23

Bulls were missing in action today.  Here is the daily SPX chart.

The no taper FED announcement has been retraced.  The Aug. high of 1709 did not provide support.  SPX tested below the round 1700 number, but held on the close.  When SPX broke out above the May high in July it did some testing of that high.  In that process it never closed more then two points below it until the 8/15 big gap down.   We closed about 8 points below the Aug. high today.  The bulls were not near as supportive of this break out as they were in July.  Lets have a look at the SSO 60 min. chart.

SSO broke below the 50 SMA this morning and remained there all afternoon.  Are the bulls going to rally the troops and push the market higher or are we going to end up with an inverted V top?  The bulls need to get SSO back above that 50 SMA to take control of the market again.  Remember that SPY went ex dividend last week so its hourly 50 SMA is messed up for now.  Some other ETF or the futures should be watched instead.

The market was so extended that even after three down days SPX is still 24 points above its 18 DMA.  The first line of support for the break out to new highs failed.  That shows dip buyers were reluctant today.  The 50 DMA at 1679 and the 18 DMA at 1677 form the next major support area if 1700 is broken on the down side.  Will the bulls show up tomorrow or will they stay subdued?  Something seems to be bothering them that was not a problem back in July.  Check out the financial ETF XLF.

XLF did not break out above its Aug. high after the FED no taper announcement.  It also closed back below its 50 SMA today.  The financial stocks have been providing most of the earnings growth for the last few quarters.  The rise in rates has caused mortgage applications to plummet.  I have seen several layoff announcements from some of the big banks for their mortgage divisions.  The higher rates over the last few months may be crimping their earnings.  Could that be bothering bulls now? 

Chart practice has been updated with STX the stock tonight.


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