Markets were able to cut intraday losses in half Tuesday but still spent the vast majority of the session in the red and of course ended that way. It was the Nasdaq that slipped up .2% and the S&P 500 by .5%. The S&P 500 remains the laggard and it has now spent all but 2 days CLOSING above its 50 day SMA since undercutting the line on 9/9 in elevated trade. There is no sin slicing that line, as many stops will generally accelerate a move away from it, but it has to be recaptured quickly. It has now spent virtually a month underneath it and that action now has the benchmark feeling like an anchor. Looking at the Russell 2000 which pierced its 50 day to the downside in early September too only resided below that line for just 2 sessions, but is dangling on support presently. One does get the overall feeling that that markets keep teasing to break out to new highs only to be thwarted. The TINA acronym has not been thrown around very much recently and perhaps for good reason as yields are beginning to percolate. The 10 year has risen powerfully and is enjoying a current 3 day winning streak as the greenback is getting some love as interest rate chatter later in the year heats up. This tape has pounded the utilities mercifully as the XLU was the worst performing sector Tuesday falling 2.1% and now on an 8 session losing streak. For the week the fund is lower by 3.5% thus far and that is on tap of the giant 3.8% decline last week. One needs to determine which groups are likely to see that capital rotated into and with real estate names and other bond proxies hurting, a good bet would be some risk on areas. Obviously there have been some market participants caught off guard as the financials several times looked for real with short lived rallies, only to break down as rate hike gossip dwindled. This time it feels different. Is the economy ready to take a step forward, will a new administration next year have lighter regulatory standards for the group? As always focus on the price action and finnies were the only industry to swim upstream with the XLF higher by .4%. Of course the group is diverse and below is the chart of ICE and how we profiled it in our Monday Game Plan this week and watch to see how it reacts if it does indeed fill in the gap from the 8/2 session.
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