Wednesday, August 22, 2012

Morning Market Analysis

All of the above charts are of the SPYs.  The top chart shows the daily price action.  Prices have moved about resistance and are now near 6 months highs.  All the EMAs are moving higher; momentum and prices are strong.  The lower two charts put the latest rally in perspective.  The middle chart shows 60 minutes time increments.  The market has enjoyed a nice, consistent uptrend.  However, the lower chart -- which is in 30 minute increments -- shows prices have broken trend.

Above is a 5 minute SPY chart.  After 10 AM, prices started moving lower, and continued moving lower for the entire trading session.  This is what led to the trend break on the 30 minute chart. 

Given the length of the latest rally and yesterday's price action, I think we'll see some profit taking over the short term.

The homebuilding sector rallied from October to April of this year.  Then the sector sold-off to highs established last spring.  However, prices have now moved through highs again.  Also note the bullish EMA picture, rising CMF and buy signal from the MACD. 

The daily chart of the XHBs shows prices consolidating for most of the last six months, trading between the 19.5 and 22 price levels.  However, prices have clearly broken out.  Notice the bullish EMA pattern and rising MACD.