Tuesday, October 16, 2012

Morning Market Analysis

The SPYs have broken support and are looking to use the 50 day EMA for technical support.  Also note the declining 10 and 20 day EMAs and MACD, indicating the correction is playing out.  The negative CMF reading tells us that money is now leaving the market. 

The IWM sell-off has been going on for about a month.  However, prices are still at the 50 day EMA with declining shorter EMAs.  But, notice the10 day EMA is now below the 20 day EMA and the CMF is negative and has been for the whole month.

The QQQs have also broken trend and are now below the 50 day EMA.  The 10 day EMA is about to cross below the 50, but, like the two charts above, the MACD and CMF are reading a contraction.

The US equity markets are correcting.  There is nothing inherently bearish about these developments; the underlying technicals are playing out like a standard market sell-off.

The homebuilding sector has been rallying since last fall.  We've see a move higher (through the 200 week EMA), a consolidation down to the 200 day EMA and a second move higher, followed by a move down to the 10 day EMA.  Note the big influx of money (rising CMF) since the beginning of the summer.

The semi-conductor market is consolidating in a triangle pattern.  While momentum is declining, there is a positive inflow of money in a rising CMF.