Tuesday, September 4, 2012
Morning Market Analysis; Stalling Markets and the Fed
All of the ETFs that track the major averages have stalled at resistance: the IWMs have hit the 82 level and stopped; the QQQs are at 68.5 and the SPYs are at 142. We also see all major averages consolidating in some pattern: the IWMs and SPYs are forming a symmetrical triangle pattern while the QQQs are in the middle of rectangle consolidation pattern. In short, the upward momentum has stopped at important levels.
At the same time, we're seeing the treasury market rally in reaction the Bernanke's speech last week. The IEIs have retraced 100% of the end of July-middle of August sell-off, the IEFs have crossed the 61.8% Fib level and the TLTs are at the 61.8% level. This treasury rally will pull money away from the equity market making a move above current resistance very difficult.