Wednesday, March 28, 2012

Morning Market Analysis

Yesterday, the grain complex took a big hit, as traders dumped the corn contract.  Prices have now moved through the late October price level twice in the last two weeks, indicating weakness.  The big news for this market coming up is the crop report on Friday (shades of Trading Places, I realize).

Industrial metals are still bouncing between the 200 day EMA (right below 21) and the 50%/61.8% Fib level.  While we see declining momentum, the volume indicators are positive.  However, the shorter EMAs (10 and 20 days) are declining, while the 50 is just turning a bit negative.

The oil market has been trading between 104 and 110 for the last month.  Momentum is decreasing and the shorter EMAs are trading in a very tight range. 

While the other averages have broken through resistance, the transports have not.  Instead, they've been contained by resistance just north of 96.  While the EMAs are fairly shallow, the volume indicators are rising.

The treasury market is still rebounding from its low just north of 101.  Prices have moved through 38.2% Fib level and the 10 day EMA are are now right at the 50 day EMA.  The 104 price level is very important for this chart, as that is the support area of the trading range the IEFs were in for the first two months of the year.

The commodity charts should concern the bulls.  In a growing economy, we should be seeing these move through resistance -- especially the industrial metals.  However, they're treading water.  The good news is they're not falling sharply.  The bad news is they're not rallying.

The lack of confirmation from the transports is not fatal to the other averages, but it does add a sense of caution to any advance.  Finally, the rebounding treasury market can, so far, be attributed to short-term bottom fishing.  But, we need to keep an eye on where prices move.