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Monday, December 30, 2013

Daily update 12/30

Another consolidation day.  Here is the daily SPX chart.

The last two days have had a very narrow price range.  As expected there is virtually no selling pressure here at year end.  Lets zoom in to the SPY 60 minute chart.

This consolidation is happening at the 18 SMA.  SPY spent some time below the 18 SMA today, but did not break down and closed right at it.  It would not take much to get this market going up again from this position.  SPY has a couple more days to go before the affect of the dividend gap down is gone from the 50 SMA.  However, I think it is probably ok to use it as the bull/bear line now.  Until SPY breaks that MA the bias is up.  Lets take another look at the TLT daily chart.

TLT continues to try not to decide what to do from here.  After breaking the lower trend line on Friday it popped back inside the triangle today.  It is pretty rare to break both lines and get rejected this close to the apex.  I had a feeling we might not see the resolution until after the new year.  This is certainly winding up for a big move.  We will just have to see what direction it takes.  TLT is in a bigger picture decline and this formation has higher odds of down then up.  That combination should make the odds for a break down higher, but odds are just odds.  Nothing in the markets is 100%.  Whichever way this goes it will likely have some affect on interest rate sensitive stocks like REITs and home builders.  It may have some affect on the economy and the stock market in general.

The VIX surged up over 8% today.  I would say some people were doing some hedging.  I have been wondering if there was going to be some profit taking after the 1st.  The move up in the VIX may be a result of some people worried about that.  With sentiment this bullish there could be significant money inflows to start the year.  We saw that the last two years.  I don't know if that means we won't see it this time or not.  You know how just about every time a pattern shows up in the market it stops showing up.  I am pretty sure there will be a bout of profit taking sometime early next year, but it might not happen right away.


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