Friday, March 1, 2013

Morning Market Analysis

Short summary: The US market is selling off, but in a disciplined way. While the treasury market has rallied through resistance, it is now consolidating gains below the 200 day EMA. After a weak GDP print, the Indian ETF moved below the 200 day EMA. And gold is approaching support on the weekly chart.

The SPYs are now in a downward sloping run.  After hitting a high in mid-February, prices have traded down to the top Fib fan and then rebounded to just above the 10 day EMA.  The MACD and CMF all indicate a further move lower is most probably.  The best news in this chart is that the sell-off is not sharp, but instead is contained.

After strongly breaking through resistance on Monday, the long end of the treasury curve hit the 200 day EMA and stalled.  However, prices now have the rising 10 and 20 day EMAs to use for technical support.  The real question is whether prices will move through the 200 day EMA.  A move through that level would signal a strong change in the overall tenor of the market.

Yesterday we leaned that Indian GDP fell more than expected, which made the Indian ETF one of the biggest losers yesterday.  Most importantly, the technicals of this chart continue to weaken.  Prices are below all the EMAs and are now below the 200 day EMA.  Momentum is decreasing and money is flowing from the market.  At this point, I'd look for an entry point and then short.

The weekly gold chart is now at the lower boundary of its year long trading range.  Also note the weakening technical position: declining MACD and CMF and prices below the shorter EMAs.  A break of 150 would send a clear shorting signal, with a price target of the 200 week EMA.