Monday, October 29, 2012

Morning Market Analysis

The 30 minute SPY chart (top chart) shows that despite the hoopla surrounding the market narrative last week, the big downward move actually occurred between Monday's close and Tuesday's open.  For the rest of the week, prices traded sideways.  The 60 minute chart (middle chart) does indicate that prices are now below key support around the 142.5 area.  The daily chart (bottom chart) shows that prices have broken below all the shorter EMAs (10, 20 and 50) and are now trading at a Fib fan level.  However, momentum is dropping, prices are weakening and money is flowing out of the market, indicating that the most likely move over the short-term is down.  The next price target would be 139.20.

The treasury market is not offering any upside hope from the equity market.  The SHYs (1-3 years and shown in weekly form) is still at the upper end of its multi-year range (top chart).  The IEIs (3-7 years, second from top, daily format) and IEFs (7-10 years, third from top, daily form) are both in the middle of a trading range/consolidation pattern while the TLTs (bottom chart, daily format) are at the upper end of a downward sloping channel.  In fact, should the TLTs break through resistance, we'd have to conclude that the safety trade was back on in a big way.