Friday, March 30, 2012

Morning Market Analysis

The 30 minute QQQ chart shows that this week's price action -- at least so far -- has been a total wash.  Prices rallied on Monday and Tuesday, but retreated on Wednesday and Thursday.   On the chart we see two important price levels: 67.4 -- which was hit near the end of trading on 3/21, and 67.2, which was hit on 3/22/.  Both provide technical support. 

The daily QQQ chart shows the overall rally is very much still intact.  Prices are in a clear uptrend and using the shorter EMAs (10 and 20 day EMA) as technical support.  Momentum is positive and money is flowing into the market.  There is technical support in the 67.24 and 66.25 areas

The IWMs are still having a hard time getting about the 83 price level, which has acted as a center of gravity for the last few weeks.  While the short term (one month) momentum trend is positive, the longer term momentum trend (two month) shows a deceleration.  But, so far, the other technical indicators are positive.

Like the IWMs, the transports are also having a hard time getting above an important technical resistance level, which here is right around 96.5.  Also note the weaker MACD and EMA reading.

In contrast to the equity markets, the treasury market has been rallying for the last 7 days.  Prices are in a clear uptrend; along the way we see several downward sloping patterns to consolidate price action.

The IEFs daily chart shows that prices have now rebounded to the lows of mid-January.  That's a technically important development that indicates the safety trade has returned to a fairly strong degree.

The TLTs are not quite at the rebound levels of the IEFs, but they're approaching those levels as well.

Consider the following: Asian markets are struggling as a result of China's market's drop; the BRIC countries are seeing their markets in a weakened position; the EU markets are hitting resistance; the US treasury market is rallying a bit after an important technical sell-off, and the transports and Russsell 2000 aren't participating in the rally.