Yesterday, the market opened sharply lower, but then rallied several times with the most impressive being the end of the day rally on increased volume that hit resistance about 20 minutes before the close. As the daily chart shows, prices moved between the 20 and 50 day EMA. However, overall remember that prices are still in weak technical shape, essentially in a bear market pennant pattern.
The longer end of the Treasury curve is still having difficulty making a strong advance. Earlier in the day, treasuries were up on extremely (what is for Treasuries) bullish news; serious questions about the viability of the EU situation. But prices simply could not maintain the rally -- and this after a large gap higher on the TLTs at the open.
The above 5-minute chart adds important clarity to the treasury picture. After gapping higher at the open, prices moved sideways until they hit the 10 minute EMA. They followed the EMAs higher, but then sold off as the close approached. In other word, this was not a strong, day-long rally, but instead a gap higher at the open with little follow-through.
The dollar moved higher today, advancing through the 200 day EMA and moving through key resistance levels. However, notice the declining volume tallies over the last week. My guess is we're seeing a consolidation of the dollar after a sharp move higher.
