Sunday, December 12, 2010

Yesterday's Market

The main issue from last week's market was the grinding higher of prices in the last three days of the week. Notice that prices slowly rose, while consolidating in many downward sloping patterns throughout the week.

On the daily chart, notice that prices have risen about key resistance (A), but have not printed any singly strong bars (C). Instead we see a "melting up of prices" -- prices printing a strong rally, but with no strong bars. Also note the MACD -- which just printed a buy sign and still has plenty of upward room to move -- and the A/D line which indicates fresh money has been moving into the market on a continual basis.

From Monday close to mid-Wednesday, treasury prices dropped hard, starting with a downward gap (A), followed by a downward sloping channel (B). Prices printed a rounded top pattern for the rest of the week (C).

Treasury prices were in a downward sloping channel (A), but prices have dropped through lower resistance (B). Notice the bearish EMA picture -- all the EMAs are moving lower and prices are below all the EMAs. In addition, momentum is clearly negative (D), and money is flowing out of the markets (E and F).

So, we have a rising stock market and a falling bond market.

With the dollar, notice that prices are now entwined with the EMAs and all the EMAs are moving slightly higher, albeit at a very slow pace. This indicates that the upward trend has clearly slowed. In addition, the MACD is right at a sell sign (B) and the A/D and CMF lines indicate money is leaving the market. In short, the the technical indicators are signaling a lower move and prices are seriously thinking about it.