Friday, January 11, 2013

Morning Market Analysis

The entire weekly corporate bond market has broken trend.  The short market (top chart, weekly time frame) broke trend in December and is now right at the 20 week EMA.  The MACD is weakening and the CMF has a negative reading.  The intermediate market (middle chart, weekly time frame) broke trend in December as well, but has been moving sideways since.  Prices are also right at the 10 week EMA.  Finally, the long term chart (bottom chart, weekly time frame) broke trend lase week.  Now prices are also right at the 10 week EMA with a declining MACD.

None of these markets is showing signs of imminent collapse.  However, breaking any trend that is in place for more than a year is a very important development to keep in mind.

The chart shows the weekly Swiss franc chart.  The spike and subsequent sell off in 2011 occurred after the Swiss central bank stated they would do whatever it takes to prevent the franc from rallying.  After the intervention, the market sold-off sharply.  The currency remained in a downward sloping channel for nearly a year, until it broke trend in September of last year.  However, notice how little appreciation the currency has seen since breaking trend. 

The daily Indian chart (top chart) shows a remarkably hard to characterize market.  Prices had an upward trend until October, then fell back to the 200 day EMA in October, only to rally to the 61 price again.  The weekly chart shows that the market is right at the top end of a year long consolidation range, with the lower 60s area providing upside resistance.