Tuesday, October 23, 2012

Morning Market Analysis

The yen has been catching a safety bid as a result of all the EU turmoil.  This has not helped the country, as a higher yen leads to lower exports.  However, the weekly chart of the yen shows that prices have finally broken support and are now trading at the lower Bollinger Bank.  Also note the negative CMF reading and sell signal from the MACD.

On the daily chart, we see that yen prices have moved through several layers of support over the last week and are now headed for the lower band of their 6 month trading range.

Industrial metals have taken a nose-dive this month, dropping around 10%.  Prices are now at levels established at the beginning of August.  Note the very quick way in which the chart turned bearish: the shorter EMAs are now below the 200 day EMA, the CMF is negative and the MACD is declining.

The financial sector is in the middle of a 6 month rally.  Over the last month and a half, it has consolidated its gains.  The MACD indicates that momentum has stalled for now, but this is usually a signal the markets give when they are consolidating gains.  Until we see prices break trend, this is nothing to worry about for the bulls.

The technology sector is also in the middle of sell-off (as are the QQQs).  Prices have moved below the shorter EMAs and are headed for the 200 day EMA.  Prices are weakening, momentum is dropping and money is flowing out of the market.