Let's start with the dollar. Note that prices have moved through key support (a) and that prices have also moved through the 50 day EMA (b). The 10 day EMA has moved below the 20 and both the 10 and 20 are heading lower (c).
While momentum has dropped (d), there hasn't been a huge move out of the market yet (e and f).
With a drop in the dollar, we've seen a rebound commodities:
Agricultural commodities have moved higher (a) and the EMA picture is the mirror image of the dollars with the 10 and 20 rising and the 10 moving through the 20 (b). While there is plenty of momentum (c) there isn't a lot of movement into the market yet (d and e).
Industrial commodities have moved through resistance as well (a), but not in as strong a manner as the agricultural commodities. In addition, the EMA picture is less bullish as none of the shorter EMA has moved over the longer EMAs (b). There is plenty of momentum (c) but again we aren't seeing a big move into the commodities yet (d and e).
The lack of meaningful participation in either the DBAs or DBBs (the lack of an increase in the A/D and CMF) indicates the recent rise in price is more of a reaction to the dollar's drop in price rather than a meaningful increase in bullish sentiment.
Starting with the SPYs, notice recent price action can break down into three areas. A strong rally, characterized by strong candles (a), a top with small candles (b) and then the sell-of last week that has strong downward moving candles (c).
Last week, the market was in a strong downtrend (a). Also note that prices continued to move through key support areas ((b, c and d) throughout the week.
And finally, consider this point about Treasury yields from Barron's:
THIS MARKET MOMENT, IT'S all about the bips. In trading-desk slang, bips means basis points, or hundredths of a percentage point, the elemental unit of measure for bond yields. And the most important bips of the past week, arguably, are the mere 65 of them that make up the yield on the two-year Treasury note.
This yield has been dragged lower by a series of weaker-than-anticipated economic readings on housing and a predictable (if not widely predicted) downgrade of the Fed's scoring of the recovery. The yield on the 10-year note, also in fast retreat to 3.11%, has tracked the U.S. economic data surprise index tick for tick.
.....In case you've been trapped in the 1990s, note that stocks these days move in step with bond yields, both falling as economic worry and deflationary anxiety rises. Thus, last week's 3% drop in the Dow industrials, which brought the index toward the lower reaches of the trading range that has taunted, bedeviled and bored investors this year.
Bips can also serve as an acronym for Big Intractable Problems, the cable-news-ready messes that are quite clearly weighing on public psychology, from vexing fiscal issues at every level of Western government to the unstoppable oil spill to fractured loyalties among war commanders.
