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Stockhaven’s market take 12/12/12

The S&P500 continued its breakout passed the 1,420 level with another nice rally today, but a power hour sell off kept the indexes in check. Today felt pretty bearish to me personally. Even when SPY extended higher after 12:30 it did so on pretty average volume so there wasn’t much conviction behind the move. After an 8 day rally off of 1,400 support on 12/5, it could just be that the bulls were exhausted. The challenge for them now is maintaining the S&P’s perch above 1,420.

Here’s what I’m trading on:

  • Fed moves are completely priced in — The indexes made a big move right at 12:30 when the FOMC statement was made but slowly gave it all back
  • Banks lead the way, but finish off highs — XLF broke out to its highest level since October but was unable to close on the highs
  • AAPL continues to trade poorly — The tech giant once again gave up early morning gains to finish near its lows for the day

After three quantitive easing induced rallies the fourth time appeared to be too expected. The fed’s announcement today of QE4 initially boosted the indexes to session highs. However, as the day wore on and the market digest comments from Bernanke, the indexes gave up all of those gains. This signals to me that the Fed is pretty much out of surprises. The market knows what it is getting from the Fed and apparently doesn’t think it’s worthy of moving substantially higher. This is best exemplified by the fact that SPX is pretty much flat since the last time major FOMC announcement back in September.

The financial sector, as measured by XLF, continues to by the leader in this rally over the last 8 days. Today marked the 7th straight day XLF put in a ‘higher low’ as it has rallied from $15.58 to today’s close at $16.15. Today though the move in the banks appears stretched, as they also gave up a good portion of their gains and closed well off of the highs. XLF looks like a short term top is in, with a break below $16.10 tomorrow confirming this view.

 Stockhavens market take 12/12/12

AAPL continues to trade like an asshole. Two days in a row the stock has gapped up but with no follow thru at all. While yesterday AAPL was at least able to hold onto its pre-market gains, today it was not as fortunate. AAPL closed below yesterday’s mid point  ($543.40ish) but did have strong support in the $537-$538 range throughout the day. Volume was again very low today compared to last week which is a trouble sign to me.

If AAPL has bottomed, why isn’t there a ton of buying going on to push the stock higher? There doesn’t appear to be much demand at all even in the $530′s which is concerning for the bulls. A break below $536 tomorrow and I’ll be looking for a move back into the $520′s. Bulls need a clean move passed $545 to have me targeting a move back towards $560.

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