Here is a 60-minute chart showing the XLF gap that I have been talking about recently (click to enlarge):
The gap opened up on the morning of August 31st, so the top of the red box is set to the previous day’s close at 14.76 (blue arrow.) The lower boundary of the gap is set to the highest closing price since the gap opened, and that is the 14.69 close on August 31st (red arrow).
Prices did shoot up almost to the top of the gap at the open on September 1st (purple arrow), but were unable to hold up there, so the boundaries of the gap were not changed.
This afternoon, the XLF made it up to the top of the gap again, and couldn’t hold there (green arrow). That’s what halted the SPX’s rally. However, the XLF did close within the gap, so now I will update my chart by moving the lower line of the red box up to today’s close at 14.72.
So, the gap is still important resistance, though the XLF was able to eat away a good chunk of it. The SPX can creep higher without the XLF, but it won’t be able to blast higher until this gap is closed. Speaking of which, the SPX closed within 0.10 points of the 1049.44 of the Box of Bulls. How’s that for accuracy? See the red arrow on the chart:
It is not a coincidence that the SPX stopped on that Fibonacci level while the XLF simultaneously stopped at its gap. That sort of confluence happens all the time.
From Bloomberg: U.S. Said to Explore Selling Stock Acquired in Citigroup Rescue
Bloomberg is reporting that the Treasury and Citigroup are discussing how the U.S. can sell the 34 percent stake (7.7 billion shares) that the U.S. acquired as part of the bailout. At $4.50 per share, the U.S. stake is worth almost $35 billion.
Current set-up seems to be that HF and traders get trampled over by investment funds and govt. Mid-termish Matt might well have to come up with another box… Then there is a cliff coming.
Before the G20 some turn-around Tuesday fluctuations but I don’t think they want to get the end-of-recession party spoiled.
As for the XLF gap, Sam Seiden would say “each time price moves into the mass, some of the mass is removed (absorbed) by the demand (buyers).”
http://www.tradingacademy.com/lessons/20090915/featured_article.htm
Volume on yesterdays XLF green shoot was the lowest volume candle in a while – for an up day.