After a delayed 11:00 AM EST open for the NASDAQ and a later open for the NYSE at 12:00 PM EST, traders are back at their posts and the major market averages are holding gains, but off their best levels of the session found right after the opening of trading.
The S&P 500 Index (SPX.X) 917.15 +0.82% did break above my horizontal level of resistance at 912 and saw its morning high come at the 924 level, but currently trades just below its 21-day simple moving average, which was the first hurdle a bull needs to clear to reach my potential rally point of 940.
Similar technicals are found as it relates to both the 21-day and 50-day simple moving averages in the Dow Industrials (INDU) 8,637 +0.4%, which briefly pierced above its rounding lower 21-day MA at 8,692 with a morning best of 8,762. I'm currently looking for a potential short/put entry point near the 8,800 level, but near- term, need the 50-day MA at 8,614 to serve as support.
The NASDAQ-100 Trust (QQQ) $23.71 +0.25% has faded from its session high of $24.35, which was about 65-cents from a point I am looking for a short/put entry point with a stop in the underlying QQQ just above $26.
The session is young and Treasuries are seeing some good selling today, thus my thinking is that equities might get some "carry over" rally tomorrow and perhaps provide the bearish entry points into Friday, when I think traders might get more cautious into the weekend.
We're starting to see some sector fading in the banks as the more regional S&P Banks Index (BIX.X) 297.63 -0.32% and multinational KBW Banks Index (BKX.X) 760.19 -0.19% fade into the red. This will most likely get the institutional trader's attention near- term that the financials aren't participating in today's bullishness. For the BIX.X, both the 200-day and 21-day SMA's are rolling and providing resistance near the 302 level. Current moving average support would come from the trying to round out 50-day MA, which is below at 292. Pattern traders may look for two days of consecutive closes below the 50-day MA as further sign of weakness, something that hasn't taken place since early June, when the BIX.X broke back below its then trending higher 50-day MA.
S&P Banks Index (BKX.X) - Daily Chart Interval
The S&P 500 Index (SPX.X) may have trouble rallying to my 940 level for a bearish trade entry point if the financials don't participate and show some strength. One reason we may be seeing some weakness in the banks today is that the Mortgage Bankers applications and refinance indices jumped to a record high in the week of September 6. The applications index jumped 17% as the purchase rose 12% and the refinancing index gained 19%. The jump in refinancing came as fixed term mortgage rates hold at multi- decade lows. From a money management strategy, investors are smart to take advantage of lower borrowing costs as they pull cash out of what is considered to be a more illiquid asset in their homes and shifting risk to banks and very low rates.