Yesterday was one heck of a rally (a). Prices gapped lower at the open (b), rallied through the EMAs and then consolidated (c). After a controlled, downward sloping pennant pattern, prices broke through resistance (d) and then moved through prior highs (e). Prices again consolidated in a downward sloping pennant pattern (f), but again broke through resistance (g), closing on a high point on strong volume.
On the 10 day chart, notice that prices have now advanced above key Fibonacci levels.
On the daily chart, notice that prices and EMAs are in tight ranges on all the big averages, indicating there is an even balance between the bulls and bears and has been for at least a week.
Treasury prices are still benefiting from a safety bid. While the long-end of the curve (the TLTs) may be consolidating at the top of range, the 7-10 year part of the curve (the IEFs) continue to move higher. Until we see Treasury prices drop, we'll probably have a subdued stock market.
With talk of deflation increasing, the Gold has lost its luster. Notice that prices continue to move lower with the EMAs continuing to become more bearish. The 10 and 20 day EMAs are both moving lower and the 10 has crossed below the 50 day EMA.
While momentum has left the gold market (b), we haven't seen a huge flight out of the security (c).
