Thursday, March 14, 2013

Morning Market Analysis

The return of the dollar has been the story in the currency markets over the last month.  The top chart shows the dollar's performance relative to the other major reserve currencies except the yen (which has been in a clear bear market).  Notice how the dollar started to really outperform about a month ago; all other currencies are in negative territory.  On the daily chart (middle chart) we see the dollar has moved through two areas of resistance, one at about 22.05 and the second just above 22.2.  Since then we see a strong rally.  On the weekly chart (bottom chart), the dollar is right below the 200 week EMA.  If if moves through that level, there is a fair amount of open chart space to the highs from late last summer.

The Vietnamese ETF bears a striking resemblance to the Chinese market ($SSEC; see chart from yesterday).  After moving lower for most of last year, prices pushed sharply higher starting in late November, early December.  They pushed through resistance in the 18.5 and the upper 20s before topping in the 23.5 area.  They have since pulled back to the 50 day EMA, pulling the 10 and 20 day EMA lower as well.

The two chart above are offered for contrast.  The financial sector (top chart) is clearly one of the areas driving the market rally.  Despite a brief dip at the end of February, price have been on the same upward trajectory since the middle of November.  In contrast we have the technology sector (bottom chart) which has been a clear laggard.  It's the worst performing US sector over the last year and six month time periods, and it's performance over shorter periods is only marginally better.