Thursday, July 26, 2012

Morning Market Analysis

The IWM P&F chart shows that we had a sell-off in May and June, a rally from June to July and then a sell-off for the last few weeks.

The QQQs P&F chart shows that prices have been in a fairly tight range (62-65) for most of July.  

And the SPYs have been in a range of 132-138 for the last few months as well.

The great thing about P&F charts is they take out the noise and show absolute price moves without the daily "up 5 points, down 1 point" reporting.  And the above charts show that prices have actually been moderately stable for that time period.

After dropping from 51 to 42 (a move of about 18% from May through June), the copper ETF has been trading in a tight range (from 42-45) for the last month and a half.  Prices are still below the 200 day EMA (which is also moving lower) and the MACD has given a sell-signal.  However, money is moving into the market and prices are moderately strong. Also note the low volatility.  This chart is trying to form a bottom.  However, with weak news from a variety of economies continually coming out, it's hard to see how this chart can rally strongly in the near term. 

After spiking for a few weeks, the entire grains complex has taken a breather, largely as traders have taken some money off the table.  The most likely course of action for these futures is a sideways trade for a bit (2-4 weeks) as trader get their bearings on what the final crop looks like.  However, that assumes we won't have any freak weather events -- which is not as unlikely as we would like.