Friday, October 29, 2010

Yesterday's Market

Yesterday, we had two markets. In the AM we had a gap higher (a), followed by a down, up down market (b). In the afternoon, prices moved higher, but did so very slowly, inching up the EMAs (c).

On the daily chart, the EMAs are still in the most bullish orientation possible (a). In addition, the A/D line and the CMF both indicate new money is flowing into the market (c and d). However, the MACD indicates that momentum is decreasing (b).

The Treasury market is finally starting to sell off a bit. Notice that the shorter EMAs (the 10 and 20) are now moving lower and the 10 day EMA has moved below the 20 day EMA (a). Prices are now below the 50 day EMA as well. The MACD telegraphed this move with the decreasing momentum (a). Also notice the big drop in the A/S and CMF lines (c and d) indicating that money is leaving the market.

It's looking more and more like the dollar is putting in a temporary bottom at these levels. Notice that prices are clustered around the EMAs (a) and the 10 day EWA is now moving sideways. The MACD (b) has given a buy signal (b), although it is still negative. Also notice the A/D and the CMF lines indicate a big move into the dollar. This is either short covering (fairly likely at this part of the cycle) or new purchasers.