Monday, April 30, 2012

Morning Market Analysis

My opinion about the markets:

The US equity markets are moving into a period of consolidation, largely caused by slowing world economies and less than robust US  growth.  I don't see a meltdown, but sideways consolidation.

Let's take a look at the three major equity indexes:

Since February, the IWMs have been trading between 78 and 84 with a declining MACD.  While the A/D line has been increasing, the CMF has been decreasing.

The QQQs were the best performing index, largely thanks to its technology-heavy orientation.  However, prices have been declining in a disciplined way since the beginning of April.  Also note the declining MACD over this time period.

The SPYs fall somewhere between the IWMs and QQQs; they have been moving sideways for a bit longer than the QQQs, but have an MACD profile that more closely resembles the QQQs.

For my opinion to change, I need to see two of the above averages move through the following price levels:

SPY: 143
QQQ: 69
IWM: 85

In addition, the US treasury market has again caught a safety bid all across the curve.  The IEIs (5-7 years) have been trading between 122.5 and 120; the IEFs (7-10 years) have been trading between 101.6 and 106 and the TLTs (20+ years) have been trading between 109.5 -118.6.  Also note that with all the charts above we see an increased Bollinger Band width, telling us that the treasury market is actually a bit more volatile now.

The dollar is not giving us any major indication in either direction; it's trading between 21.77 and 22.30, and has been for the last three months.