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Wednesday, September 25, 2013

Daly update 9/25

Another down day.  According to Bloomberg TV this was the first time we had five days down in a row this year.  The last time that happened coming off a bull market high was in April of 2012.  Those five days were much more violent and took SPX well below the 18 DMA.  This has been much more gentle so far.  Here is the daily SPX chart.

There have been some dip buyers every morning.  SPX seemed to find resistance around 1700 today.  Yesterday morning there was a market rally that ripped right through 1700 to the upside.  What is missing is rally chasers.  Every bounce ends up getting sold into. No panic selling, but persistent selling into strength.  I thought closing below 1700 would bring out more selling then it has.  Lets look at the 60 min. SSO chart.

SSO actually closed below the neckline of the possible head and shoulders top pattern.  However, nobody seemed to care as there was no acceleration down.  The volume bars are still big red dominant so there is distribution going on.  At what point do people get a little jittery?

The bulls were really busy defending that neckline today.  At the end of the day they lost the battle, but I can't be sure whether they lost the war or not.  Will the bulls try to get it back above the neckline tomorrow? We still have another 13 SPX points down to the 50 SMA.

There seems to be a distinct lack of fear on this sell off.  I find that kind of odd with all the rhetoric coming out of Washington these days.  I guess market participants have been through the drama enough times before to believe that in the end they will agree on something.  That may in fact be true.  However, I would point out that in the past those agreements only came when there was at least some fear in the market.  At this point there does not appear to be any negotiations going on and both sides seem to be happy to have a government shutdown.  I don't know if the market will continue to stay calm as deadlines approach or not.

Chart practice has been updated with PSX the stock tonight.


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