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Friday, September 27, 2013

Daily update 9/27

The bulls forgot to show up for quarter end markup day.  Here is the daily SPX chart.

SPX closed below the low of the last several days but found support at the 18 SMA.  That is now down 6 out of 7 days.  Despite that statistic there seems to be no worry in the air.  I suspect this is due to the NASDAQ and Russell2000 not selling off.  Why are so many big cap stocks selling off?  Why aren't the other indexes being affected?  I am sure it is not related to the games being played in Washington.  First of all, everybody thinks it is all just grandstanding and some deals will be made.  Second of all, if that was the worry then I would expect the other indexes to be impacted also.  So what is the deal.  Lets zoom in to the SSO 60 minute chart.

SSO is below the neckline of the head and shoulder topping pattern.  It has not sparked any rapid increase in selling yet.  I guess that is because nobody is worried, LOL.

What happens now?  Will SPX find support here at the 18 DMA or just a little further down at the 50 DMA?  Until the bulls do something that we can identify as a positive for the market the path of least resistance appears to be down.  We are not building up the usual oversold tensions because many indexes are not breaking down yet.  If they join the party then selling will likely pick up.

The big question now is does SPX stop going down before people get worried or after.  It is possible the move down is because of earnings season jitters.  What is clear is that some people are selling rallies while others are buying dips.  Which is smart money remains to be seen.  This looks like a real serious top to me.  Is that just a bearish bias or is it real?  In Daily update 9/19 I showed the big divergence that has formed in the number of stocks above their 200s.  That is always a red flag.  In addition I am seeing lots of junk stocks making huge runs lately.  I think there are so few stocks still going up that traders are flocking to the junk.  This was very prevalent in 2000.  I did not notice it so much in 2007.  I think that was because the commodity related stocks were still surging after the broad market topped.  That is not the case this time.  So the traders are running junk.  These are signs of a dying bull market.

Have a great weekend all,

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