Friday, October 1, 2010

Yesterday's Market

Let's start with the Treasury market. Notice that prices are still right below the long-term trend line. But it's not just the Treasury market that is absorbing would-be equity investors.

The lnvestment grade corporate bond market is also in a strong rally (note the classic advance (a), sell-off (b) advance (c) structure), as is

the junk bond market. Notice that prices have moved in an advance (a) with downward sloping consolidation channels, with a sell-off (b) and a further advance.

The SPYs have gotten right above key resistance levels (a), but notice the rally has stalled at least for now.

The DIAs are right at important resistance (a) and have been there all week.

The IWMs -- like the SPYs -- have advanced beyond important resistance, but just barely.

the one exception has been the NASDAq, which has had a strong advance. Prices are above key resistance levels (a) and during the rally we've seen some strong bars (c) and several gaps higher (b). But the advance hasn't translated to other markets.

My guess is the flow into fixed income is taking money away from the stocks market right now.

Although still in a trading range, oil has recently advanced through resistance (A), printing some very strong bars (B). Now prices are above resistance (C), and momentum has given a buy signal. But note that oil stocks are still incredibly high and will probably act as a damper on strong upward movement.

After a strong rally in reaction to the Russian wheat embargo, wheat is now selling off (A) and is now below the 50 day EMA (B). Also note the MACD is giving a strong sell-signal.