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Thursday, January 16, 2014

Daily update 1/16

Inside day.  Here is the SPX daily chart.

Volume declined today, but was still above the 50 day average.  Today was a very mixed day with some indexes up and some down.  The financials and transports were dinged a good bit while utilities were strong.  That is a little like risk off.  We will have to see if that continues.  Lets zoom in to the SPY 60 minute chart.

Going back to Dec. this pattern looks like a possible bullish cup and handle forming.  Will it break out or end up as a double top instead?  The answer lies in how people feel about pushing price into new high ground.  I did not really see anything today that answers that question.  Last year nothing mattered but QE.  With taper a reality I believe further upside may rely on earnings.  That may also mean that we need to get further into the earnings season for people to make up their mind whether to push price higher or not.

TLT continues to rebound.  The prognostications for 2014 that I read the most were for interest rates to go up along with stocks.  So far SPX has traded positive on the year for a few hours while rates have fallen right from the beginning.  After QE1 and QE2 ended rates fell and so did stocks.  Maybe it will be different this time and maybe it won't.  Stocks certainly are not getting off to a rip roaring start like they did the last two years.

If we break out on the upside there is no overhead resistance.   The upper trend line on the daily chart above might make a useful target.  That is above 1900 now.  On the downside SPX's 18 DMA has risen up to 1836 which is below the magical 1838 level.  A close below that MA after a test of the Dec. high is likely to bring out some sellers.  The last swing low at 1815 would be the next potential support level.  Below that is 1808, 1800, and 1775.


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