Thursday, November 4, 2010

Yesterday's Market

The big news yesterday was the dollar, which moved though several key support areas on high volume. Over the last few weeks, I've commented that the dollar was forming a selling climax, largely based on the prices bunching at a low area and converging around the EMAs. The Fed's move into QEII is a strong fundamental development that will provide strong, downward momentum for the dollar going forward.

Stock prices opened slightly higher (a) and moved sideways for the first hour of trading, after which prices moved through key EMAs (b) and settled near the 200 day EMA until the Fed's announcement. Notice that the period right after the Fed announcement was extremely volatile (d), with prices moving strongly accompanied by higher volume. However, prices finally made two pushes higher at the end of the day (e and f).

Notice that stock prices moved through key resistance levels yesterday.

Treasury prices gapped higher at the open (a) and traded sideways until the Fed announcement (b). Prices dropped hard at first (c), but they found support at key levels (d) before rebounding at the end of trading (e).

Treasury prices retreated to just below the 50 day EMA (a), but have since rebounded to the 10 day EMA level. While the short term trend is moving lower (the 10 and 20 day EMA), notice the 50 day EMA is still positive, indicating the long-term trend is still positive.

Crude oil finally moved through key resistance (a) and printed a buy signal on the MACD (b). Also notice the EMAs are still positive with all moving higher and the shorter above the longer.