Monday, March 11, 2013

Morning Market Analysis

Short Summary: The market continues to rally.  Stocks continue to be the best performers among asset classes over multiple time frames.  ETF internals are again more bullish with the financial and consumer discretionary sectors contributing to weekly gains.  Just as importantly, the bond market is selling off, with the longer ETFs trading just below important technical levels.

The longer term 60 minute chart (top chart) shows that with the exception of the late February sell-off, stocks continue to move higher.  Most impressively, the trend line that has supported the rally since the beginning of the year continues to provide support.  On the daily chart (bottom chart), prices have gapped higher, moving through the resistance area just above 153.  The EMA picture continues to be bullish with all the EMAs rising.  The MACD has given a new buy signal.  And while the CMF is weak, it is still positive.

Just as important as the stock market rally is the sell-off in the treasury market.  The 7-10 year area (top chart) has dropped to just above its six month low.  The 10-20 year area (middle chart) is just below support and the long end of the market (bottom chart) has moved just below long term support.  A move lower by either of the long-term ETFs would signal an important change in market direction.