Thursday, November 10, 2011

Morning Market

Yesterday, we saw prices move through support, rally into what was support (and is now resistance) and then sell-off to levels established last week.

If we look at the riskier markets we see a stronger sell-off and move overall volatility.

In contrast, we did see the Treasury market move higher, but not by much.

In fact, if we take a closer look at the daily chart we see a very weak candle on low volume.  While prices did move through important technical areas (104.6) they didn't really move much higher.

In fact, if we look at the long end of the Treasury market, we see that prices didn't move through the 119.25/119.50 area which would indicate a new move higher.

I would expect the equity markets to continue moving a touch lower; the fundamental background is still negative and the SPYs, IWMs and QQQs all printed negative days on higher volume.  In addition, all three are between their respective 10 and 20 day EMAs, so the 20 day is a natural downside target.  However, the lack of strong upward movement in the treasury market means traders will be looking for other assets for their safety play.  What's probably keeping the rally in check is the higher inflation we're seeing, which already means the yield on the 10-year is negative.