Monday, December 28, 2009

Market Mondays

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A.) Is a consolidation area that has lasted over a month. Notice how weak the candles are in this area -- there are many with short bodies indicating narrow trading ranges. In addition, there are longer bodies indicating a large amount of volatility.

B.) Prices, however, may be moving higher right now. Traders have consolidated their gains.

C.) The MACD is giving a buy signal.

D.) The A/D line tells us that during the consolidation we didn't see a huge flight out of the market. Instead, we saw people biding their time.

Consider these points in conjunction with these posts from last week.

The general trend for the stock market this year is up which the general trend for the bond market is down. In short, money is leaving safe investments and moving into riskier assets.

The bond market may be signaling a stronger recovery. The long end of the bond market has sold off indicating investors may be leaving the safety of US government securities.