SPX gapped down and then bounced after almost touching the 50 SMA. However, the bounce ran out of steam mid day as they have been prone to do lately. SPX has had two up days since the all time high was made and there was no follow either time. Price is now stuck between the 18 and 50 SMAs. Here is a look at the SPY 60 minute chart.
SPY has now hit the 50 SMA four times over the last two days. Like yesterday it closed right at it. Clearly that has been significant resistance. Will it overcome that tomorrow or be turned back again?
It looks like the key is the SPY hourly 50 SMA on the upside and the SPX daily 50 SMA on the downside.
A break out of that zone should be the start of the next move. The lack of follow through on yesterday's strong bounce indicates that while dip buyers may be plentiful, rally chasers are not. Rally chasers will be needed to push prices higher. Otherwise we will eventually break down.
So far the market has pretty much ignored Washington. The latest word seems to be that they will lump the shutdown with the debt ceiling issue. The deadline for the debt ceiling is around Oct. 17th. If things work as usual that means they will come up with an agreement at midnight Oct.16th. I am positive that everybody expects some kind of deal will be struck and there will be no default. The market has caught on to the game so it is not really paying much attention. The only question I have is will that continue as the drama builds towards the deadline. The drama will undoubtedly build and we will be told many times how serious this is.
I don't know the answer to that. It still appears the path of least resistance is down based on the lack of upside follow through.
Chart practice has been updated with VTR the stock tonight.
http://traderbob58-chart-practice.blogspot.com/
Bob
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