Thursday, February 21, 2013

Morning Market Analysis; Is the Rally Dead?

Brief Summary: The SPYs broke their uptrend yesterday on both the 60 minute and daily chart.  The DIA didn't confirm the trend break but the IWMs did.  The dollar rallied through resistance.

On the international front, the Eastern European ETF has formed a rounding top and is heading lower after breaking trend at the end of last month.  The Malaysian market has broken trend on the weekly chart, indicating an important shift.

On the 60 minute SPY chart (top chart), the SPYs broke long-term support, first started with a trend line that began in early February.  On the daily chart (bottom chart) the SPYs also broke trend, this time the trend line started at the beginning of the year.  Also note the high volume on yesterday's sell-off.  Finally, consider the MACD's overall position: it's been moving slightly lower for the last month, not confirming the rally in the overall market.

The DIAs (top chart) still have support at the 138 and 139 level; yesterday's sell-off wasn't that sever.  However, the IWMs (bottom chart) had a sharp sell-off, breaking their month-long trend.  Prices moved through two Fib levels as well.

The dollar has been trading between the 21.6 and 22 level since the beginning of December.  Yesterday price broke through upside resistance printing a very strong bar on decent upside volume.  The MACD is confirming this change in trend.

The Eastern Europe ETF broke its uptrend at the end of January.  It's been moving lower in a disciplined sell-off.  Prices are now below all the shorter EMAs (10, 20 and 50) with the shorter EMAs moving lower.  The MACD is negative and the CMF is weakening.  The next logical price target is the 61.8% Fib level.

The Malaysian market continues to weaken.  On the daily chart (top chart) prices sold-off to the previous level of 14.30, tried to rally but hit resistance at the 50 day EMA and have since sold off back to the 14.30 level.  The damage, however, is on the weekly chart (bottom chart).  Prices have broken the trend started at the end of 2010 -- a very important technical development.