Friday, June 27, 2008

Weekend Weimar and Beagle

Well I finally have some pictures of the new kids in the new house.

This is Kate and Scoobey on one of many dog blankets around the house. This is right in front of my desk.

And above is Sarge on his favorite blanket (which he has actually drug around the house). This is right to the left of my desk.

Have a good weekend. I'll be back on Monday.

Forex Fridays -- The Yen

Let's take a look at the weekly and daily yen charts.

On the weekly yen chart, notice the sharp rises and falls over the last year. Also notice the yen continually moved higher, breaking through resistance and consolidating gains in sharply downward sloping pennant patterns. Also note the yen has broken through the trend line it established about a year ago.

On the daily chart, notice the yen has been in a downward sloping pattern for the last three months. While the SMAs have a very bearish orientation with the shortest below the longest, the two shortest SMAs have both moved a bit higher over the last few days.

Forex Fridays -- The Euro

There's been a sea change in the Euro/US relationship which can best be summed up as

The outlook is leading currency traders to temper bets in the euro against the dollar -- not only because euro-zone fundamentals are gnawing away at support for the common currency, but also because a deteriorating forecast will stymie further rate increases there. The Federal Reserve has more room to increase rates after an aggressive easing cycle. The threat of persistent inflation confounding euro-zone policy makers is shared by the U.S. as well.

However, on Wednesday ECD head Trichet reaffirmed his position about a possible rate hike:

European Central Bank President Jean-Claude Trichet repeated Wednesday that the rate-setting ECB governing council could raise the key interest rate July 3, but declined to comment on policy action further down the road to combat runaway inflation.

Mr. Trichet told the European Parliament Committee on Economic and Monetary Affairs in Brussels that the governing council may raise the ECB's main refinancing interest rate "by a small amount" to 4.25% from 4% currently, to anchor inflation expectations. "I said it's possible," he said, adding that markets participants had given this message the necessary attention.

Trichet has been consistently hawkish regarding interest rate policy.

Let's go to the charts:

On the weekly chart, notice the euro has been in a consistently rising position. It has moved through areas of resistance, consolidated gains and then moved higher. Also note the very bullish SMA alignment. The 20 and 50 week SMAs are both moving higher. While the 10 week line is currently moving sideways the remainder of the indicators tell us the chart is still in a rally mode. If the 10 week moves through the 20 in a convincing manner, then we'll get concerned.

On the daily chart, notice we're still in a consolidation pattern with prices and the SMAs giving a ton of contradictory signals.

Incomes With And Without Free Money

From Marketwatch:

Excluding the impact of the rebates and inflation, real disposable incomes were flat.

In other words, absent a one time stimulus from the Federal government, everything is not OK. That does not mean the checks aren't important because they did add to income for a certain period of time. But it's incredibly important to remember a one time event that is impacting the raw numbers. Over the next few months we'll see a return to non-stimulus numbers. And those probably won't be that good. Why you ask? How can someone get a raise when the job market is deteriorating?

Year over year job growth has been deteriorating for a long time, and

Unemployment is increasing.

This is not an environment where an employee can say, "I need a raise."

Forex Fridays -- The Dollar

I'm going to start to break the forex segment down into three pieces, one on each of the the big currencies. Today we'll start with the dollar because the Fed met this week and left rates unchanged. Here is the key phrase from their policy statement:

The Committee expects inflation to moderate later this year and next year. However, in light of the continued increases in the prices of energy and some other commodities and the elevated state of some indicators of inflation expectations, uncertainty about the inflation outlook remains high.

Markets took this as the Fed nothing up their inflation fighting rhetoric. In essence, the Fed was saying "we're pretty much done lowering rates; our next move will be higher. We're not doing that today, but we're closer to doing that now than yesterday."

Let's take a look at the charts:

Let's start with the P&F chart, which is a great way to cut out the market noise and see what prices are really doing. With the P&F chart, notice the dollar has been dropping since 2001. Combine that with the fact the US experienced an expansion starting at the end of 2001 and you get an idea for how deep the problems with the dollar go.

On the weekly chart, notice the following:

-- Prices have been dropping for the better part of two years, continually moving through support levels to establish new lows

-- Prices have been using the 10 and 20 week SMA as resistance areas

-- The 20 and 50 week SMA are currently moving lower

-- The 10 week SMA is moving up and is about to cross over the 20 week SMA. This is a positive development. However...

The dollar is at the bottom of a consolidation range with the momentum indicators giving an overbought signal. The SMAs are giving a counter-veiling signal. All three are generally moving up. However, I think this week's fundamental events (the Fed leaving rates unchanged) adds downward pressure.

Thursday, June 26, 2008

Today's Markets

The markets had a terrible day. First, let's look at some observations from regarding the market.

This is from their noon update:

The financial sector has come under heavy pressure, currently down 2.9%, after Goldman Sachs lowered its rating on the broker sector and indicated Citigroup (C 17.78, -1.07) may incur additional write-downs and may also raise more capital, according to reports. Reports also indicated Goldman believes Merrill Lynch (MER 33.94, -1.52) may also raise capital. Shares of C were added to Goldman’s Conviction Sell List, according to Dow Jones.

Once again we see financials are a big reason for the problems. As I posed below this shouldn't be a surprise. We are still hearing reports from the financial sector that they need to raise more cash, writedown more assets, cut more dividends and sell more assets.

And then there was oil:

Crude oil jumped above $140 a barrel to a record as Libya threatened to cut output, OPEC's president said prices may reach $170 by the summer and the dollar weakened.

Libya may curb output because of a U.S. law that allows terror victims to seize assets of foreign governments as compensation. OPEC President Chakib Khelil said oil may surge on a European interest rate rise, France 24 reported. Oil, gold and copper climbed today as the dollar dropped because the Federal Reserve gave no signal of higher interest rates yesterday.

At a time when infltion worries are picking up we now have another day when oil hits a record. This is not what the market needed.

GM was downgraded:

Goldman also lowered its opinion of General Motors (GM - Cramer's Take - Stockpickr). Losing 10%, GM, along with fellow Dow component Citi, led the index downward. Every Dow stock was losing ground.

All in all, it was a terrible, horrible, no good very bad day. Let's go to the charts.

Above are the weekly charts for all the indexes. Simply notice that today's action was a clear reversal of direction in a bid way.

The SPYs opened lower and continued to move down for the rest of the day. This is clearly a very bearish chart that does not bode well for the future.

As with the SPYs, notice the clear downward trend of the QQQQs. The index could not find bottom all day and closed near its session lows.

Interestingly enough, the IWMs didn't close at session lows, but still had a terrible day.

The bottom line is today the market realized there were still problems in the economy. The financial sector is still in trouble and the overall economy is lukewarm at best.

Markets Are Getting Killed

As of this writing, everything is down over 2% for the day. I'll have the charts and news when the market closes.

The Credit Crisis is Far From Over

From Bloomberg:

Fortis, Belgium's biggest financial- services company, scrapped a 1.3 billion-euro ($2 billion) cash dividend and will sell shares and assets to shore up capital as the earnings outlook deteriorates.

Fortis slumped as much as 12 percent to the lowest in five years after the company said today in a statement it will raise 8 billion euros by selling stock and ``non-core'' assets such as real estate. It is eliminating the interim dividend for the first time in at least three years.

Chief Executive Officer Jean-Paul Votron said he needs to take ``exceptional measures'' because the business environment won't improve anytime soon. Fortis is reeling after it spent 24 billion euros to buy part of Amsterdam-based ABN Amro Holding NV in the biggest banking takeover in history, just as the subprime mortgage market collapsed.

From Bloomberg:

Citigroup Inc., the bank that's posted the biggest losses from the collapse of the U.S. mortgage market, may take an additional $8.9 billion in net writedowns in the second quarter, Goldman Sachs Group Inc. said.

Goldman also lowered its rating on U.S. brokerages to ``neutral'' from ``attractive,'' saying the pace of deterioration in the industry ``appears to be far worse than'' it originally anticipated, according to a June 25 note.

``The turnaround in business trends that we had been expecting in the second half of 2008 may not occur as quickly as we should have thought,'' Goldman said. ``We see multiple headwinds for Citigroup,'' such as risks of further writedowns, higher consumer provisions, and the potential need for additional capital raisings, dividend cuts or asset sales, Goldman said.

From the BBC:

Barclays has said it is planning to raise £4.5bn ($8.8bn) in a share issue to bolster its balance sheet.

The firm is to sell shares to new investors, such as the Qatar Investment Authority, and existing shareholders including China Development Bank.

Barclays said the fundraising move would "strengthen its capital base".

It is the latest British bank, following the Royal Bank of Scotland and HBOS, to seek to raise money to ease the impact of the credit crunch.

And then there is this:

Goldman Sachs cut its rating on U.S. brokers to neutral from attractive, and put Citi on its conviction sell list, saying that while it still believes the market is putting too much weight on the possibility that another investment bank may fail, it is "hard pressed" to find a catalyst to move the group significantly higher over the next few months as fundamentals continue to deteriorate.

This is simply over the last two days. Add this so last week's news -- Citigroup announcing more writedowns and a Goldman Sachs report that regional banks will need an addition $65 billion -- and you get a very dour picture of the financials indeed.

Thursday Oil Market Round-up

Let's start with the P&F chart, because it shows a very important point:

Despite all the talk about trying to boost production etc., prices have only gone higher. Oil has an incredibly strong series of increasing highs. This is a really bullish chart.

On the weekly chart, notice the following:

-- Prices have been in a rally for the last year and a half

-- Prices have moved through resistance levels and then consolidated their gains

-- All the SMAs are moving higher

-- The shorter SMAs are above the longer SMAs

-- Prices are above all the SMAs

This is still a very bullish chart.

On the daily chart, notice the following:

-- Prices have been rallying for 4 months

-- Prices are above all the SMAs

-- All the SMAs are moving higher

-- The shorter SMAs are above the longer SMAs

This is also a very bullish chart

Wednesday, June 25, 2008

Today's Markets

-- California and Illinois are suing Countrywide Financial

-- Bank of American's purchase of Countrywide may pay for itself in tax savings

-- Barclay's Financial is getting $8.8 billion in fresh capital.

-- New Homes sales continue to drop

Notice the following on the SPYs daily chart:

-- Prices are back where they were when the Fed backed the Bear Stearns deal.

-- Prices are below all the SMAs

-- All the SMAs are headed lower

-- The shorter SMAs are below the longer SMAs

-- Prices are below the 200 day SMA

On the QQQQs daily chart, notice the following:

-- Prices are below the 200 day SMA

-- The 10 and 20 day SMA are heading lower

-- The 10 day SMA has crossed through the 200 day SMA

-- Prices are below all the SMAs

On the IWMs, notice the following:

-- Prices are below the 200 day SMA

-- The 10 and 20 day SMA are both headed lower

-- Prices are below all the SMAs

-- The 200 day SMA is headed lower -- and never turned positive.

None of these charts is very bullish. The SPYs chart is turning more and more bearish.

The Fed's Statement

From the Fed's website:

Recent information indicates that overall economic activity continues to expand, partly reflecting some firming in household spending. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and the rise in energy prices are likely to weigh on economic growth over the next few quarters.

Translation: The economy grew .9% in the first quarter. It's something. But it's harder to find a job, it's harder to get a loan, housing still sucks and it's really expensive at the pump. These are most definitely not good things and they will make it hard to make money going forward.

The Committee expects inflation to moderate later this year and next year. However, in light of the continued increases in the prices of energy and some other commodities and the elevated state of some indicators of inflation expectations, uncertainty about the inflation outlook remains high.

If we cross our fingers and think good thoughts, inflation will come down (We'll ignore the fact that UPS and FedEx have warned on earnings because of high prices and that Dow Chemical raised prices 25% because of inflationary pressure). But eneregy prices are really stubborn right now, so we'll keep thinking good thoughts and hope the inflation comes down.

The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time. Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.

We've already thrown a ton of money at the problem, so stop complaining. Because we've put a ton of money out on the street like a cheap hoar we don't expect things to get really bad. But man, energy is really expensive and it could be a problem down the line. In fact, people are actually noticing the energy prices are increasing

That's about the gist of it.

Waitin' On the Fed

Today is Fed day. That means we're all waiting -- Waitin' On the Fed. In tribute to this event, here is a ZZ Top video of "Waitin' On the Bus". Just substitute "Fed" for Bus while you, um wait for the Fed.

Durable Goods Orders Fair

From Dow jones

Demand for expensive goods were flat in May, and a barometer of capital spending by businesses retreated, government data on the economy Wednesday showed.

Orders for durable goods didn't change last month, holding at a seasonally adjusted $213.64 billion, the Commerce Department said. Durables, which are manufactured goods designed to last at least three years, decreased 1.0% in April, revised down from a previously estimated 0.6% decrease.

While the data showed orders going nowhere in May, the report was better than Wall Street expected; economists had forecast a drop of 0.5%.

But durable orders have gone up measurably only twice over the past six months, a sign of what the sluggish economy is doing to the manufacturing sector.

A barometer of business equipment spending - orders for non-defense capital goods excluding aircraft - decreased in May by 0.8%, after rising 3.1% in April.

The above chart makes the data a bit easier to understand. First notice the gray lines which represent the month over month change. Notice the lack of overall movement. We've seen a ton of small moves. There was also a big move about 6 months ago, but that was countered by the next months downward move.

Note especially the year over year number. First -- notice the scale on the right. The year over year change has been fluctuating a bit above 0% for the last 9-12 months. Also note the year over year number is in a clear downtrend. The bottom line is this number is slowing.

Wednesday's Commodities Roundup

Today I'm going to look at two indexes: the CRB and gold. The CRB represents all commodities (although it is more skewed towards energy) and gold represents inflation expectations.

The weekly CRB chart shows a very strong rally that started about a year ago. Note that prices have continually moved higher, broken through resistance and consolidated gains. Regrading the SMA, notice the following:

-- All the SMAs are moving higher

-- The shorter SMAs are above the longer SMAs

-- Prices are above all the SMAs

This is a bullish chart, plain and simple.

On the P&F chart, notice that prices have continually made higher highs.

On the daily chart, notice that prices had a hard time getting through the 120 - 130 area, but have now broken out of this level. On the SMA front, notice the following:

-- All the SMAs are moving higher

-- Prices are above the SMAs

-- The shorter SMAs are above the longer SMAs

This is a bullish chart.

Gold is in the middle of a multi-year rally. It has continually moved higher, breaking through resistance and consolidating gains.

However, the P&F chart shows gold is in the middle of a correction from its rally with ha series of lower highs.

Gold's daily chart shows prices are currently in the middle of consolidating. Also note that prices and the SMAs are bunched together indicating a clear lack of direction.

Tuesday, June 24, 2008

Today's Markets

-- Oil closed at $137/bbl

-- US Home prices dropped 15% year over year.

-- Consumer confidence dropped

-- Corporate profits are seen dropping 10%

-- Circuit City is up for sale.

-- Dow Chemicals raised prices 25% due to energy costs

The SPYs dropped on the open, and the rebounded by 10:39 CST. Then they rallied, broke through the 200 minute SMA but couldn't hold the momentum. THey formed a double top and then fell into the close, ending up nearly where they opened the session.

The QQQQs opened by moving lower but quickly rallied into their 50 minute SMA. They moved sideways until a bit before 1 PM CST when they tried to move through the 200 minute SMA. But they couldn't maintain momentum and gell into the close.

The IWMs opened with a move to the downside where they formed a double bottom. They rose through the 50 minute SMA, but then trended down for the rest of the day.

Today's Economic News ..... Stinks

First, home prices are still dropping:

Home prices in 20 U.S. metropolitan areas fell in April by the most on record, signaling the housing recession is far from over, a private survey showed today.

The S&P/Case-Shiller home-price index dropped 15.3 percent from a year earlier, less than forecast, after a 14.3 percent decline in March. The gauge has fallen every month since January 2007. The group began keeping year-over-year records in 2001.

Mortgage defaults and foreclosures are adding to the glut of properties on the market, while stricter loan rules are making it more difficult for prospective buyers to get financing. The prolonged real-estate slump, along with higher fuel prices and a shrinking job market, is taking a toll on consumers and the economy.

``There's such an excess of inventories that we certainly expect to see more price declines,'' said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. ``The economy is still weakening and housing still looks pretty weak.''


All of the 20 cities in the index showed a year-over-year decrease in prices for April, led by a 27 percent drop in both Las Vegas and Miami. Charlotte, North Carolina, showed a decline for the first time.

One bright spot in the report was that more cities showed a gain in prices in April compared with the previous month. Houses in eight areas rose in value, compared with just two in March. Month-over-month gains were led by Cleveland and Dallas.

``There might be some regional pockets of improvement, but on an annual basis the overall numbers continue to decline,'' David Blitzer, chairman of the index committee at S&P, said in a statement.

This index has been dropping for a year and a half. That's called a trend. And it's not a good trend.

In addition, this isn't going to end anytime soon. Inventory is still sky high and consumer demand is still hampered by massive debt and low confidence.

Speaking of which...

Confidence among Americans dropped to the lowest level in 16 years and house prices fell the most on record, raising the risk that consumers will cut back on purchases after spending their tax rebates.

The Conference Board's confidence index fell to 50.4 in June, lower than forecast, from 57.2 in May. Home prices in 20 cities dropped 15.3 percent in April from a year earlier, according to S&P/Case-Shiller, the most since the group began collecting data.

Consumers, whose spending accounts for more than two thirds of gross domestic product, are being hurt by the housing slump, rising unemployment and higher food and fuel bills.

Short version: this is bad news all the way around. Period.

The Fed's Problem

As the Fed meets today and tomorrow, let's take a look at the central problem they face (from IBD):

The economy has limped along at an annual growth rate below 1% for each of the past two quarters, and lenders continue to restrict credit.

Yet energy and food prices continue to soar. May consumer prices rose an uncomfortable 4.2% vs. a year earlier.


But the Fed is worried about inflation expectations. Consumers in June expect inflation at 5.1% over the next year, just below May's 26-year high, according to the latest Reuters-University of Michigan survey.

The concern is that workers will demand bigger pay increases to keep up with prices, sparking a 1970s-style wage-price spiral. Inflation expectations, once entrenched, are hard to change.

"Certainly the Fed is scrutinizing inflation expectations because they don't want to get a wage-price spiral going, and so far it has not," Johnson said, adding that "the weak economy is preventing that from developing."

Over the last few weeks, we've seen increased "tough talk" from the Treasury and Federal Reserve about the dollar. This helped to give the dollar a bump up in overall price. But the basic problem still remains. First, growth is slowing:

While the year-over-year number is steady, the last two quarters have shown a sharp decrease. This is expected to continue as the combination of the housing market slowdown and credit contraction lower consumer confidence, which in turn lowers consumer spending.

At the same time, he year-over-year change in CPI and PPI are uncomfortably high putting pressure on inflation hawks. So long as oil remains at an elevated level expect this situation to continue.

Short version: being a central banker would stink right now.

A Closer Look At the Transports

I'm a big fan of Dow Theory, which in a nutshell is:

A theory which says the market is in an upward trend if one of its averages (industrial or transportation) advances above a previous important high, it is accompanied or followed by a similar advance in the other.

Basically, more than one average has to advance for the market to be in a rally. This makes basic economic sense. When the economy is expanding, businesses have to ship more and more stuff from point A to point B. The converse is also true; when the economy is slowing, businesses have to ship less and less stuff from point A to point B. That's why the following news items have caused me some concern:

United Parcel Service Inc (NYSE:UPS - News) warned on Monday that second-quarter earnings would be below expectations, blaming high fuel prices and a sluggish U.S. economy.


UPS estimated earnings of 83 cents to 88 cents a share for the quarter, down from a prior view of 97 cents to $1.04 per share.

In a statement, UPS said U.S. package volume had been lower than expected, while demand for higher-priced air delivery services had seen a particular drop.

Keith Schoonmaker, an analyst at Morningstar, said the warning from UPS was hardly a surprise, given the monstrous head winds the industry faces.

"This just shows that in a challenging economic environment, with high fuel prices, that some customers are shifting to slower, cheaper shipping alternatives" within both UPS and its rivals, he said.

And add this to the mix:

FedEx(FDX - Cramer's Take - Stockpickr) says it will miss analysts' estimates for the current quarter and for fiscal 2009, as the continuing impact of high fuel prices and a weak economy drag on.

"We're pressured by serious economic difficulties," said CEO Fred Smith, on an earnings conference call. "Record high fuel prices and the weak U.S. economy dampened volume growth and substantially affected our bottom line."

Smith added that the "economic headwinds" the company is facing this year will continue into fiscal 2009. But he noted that results during this year and next "will be anomalies" that will "hopefully set the stage for fiscal year 2010."

That makes this an opportune time to take a look at the Transportation average.

On the 6-month chart, notice the average has been rallying since the first part of the year. There are two important trend lines. The first is from the extreme bottom in mid-January. While this is technically a place to draw a trend line from, I'm always reluctant to draw a line from a point this extreme on a chart. I think the more accurate line is the second line started just after the extreme point.

Using the first trend line (the one from the extreme point) notice the average broken trend in mid-May. Using the second line, notice prices are right at the trend line. Also note the broadening formation that formed in May, which is usually indicative of a market top.

On the SMA chart, notice the following:

-- Prices are above the 200 day SMA

-- The 10 and 20 SMA have moved lower

-- The 10 day SMA has crossed below the 50 day SMA

-- The 50 and 200 day SMA are still positive

-- Prices are SMAs are bunched in a close range

What does all of this tell us?

-- The short term trend is down as indicated by the declining 10 and 20 day SMA

-- The overall trend is still higher

-- Whenever prices and SMAs are bunched together in a tight range it indicates the market is looking for a direction about where to move.

Treasury Tuesdays

Let's start with the most important chart in the Treasury market -- the 7 - 10 year chart.

The middle part of the curve started rallying at the beginning of July. This was a flight to safety caused by the start of the credit crunch. Prices rallied until early March of this year when they started to move lower.

On the 3-month chart, notice the following:

-- Prices have moved below the 200 day SMA

-- The 10, 20 and 50 day SMA are all moving lower

-- The 10 and 20 day SMA has move below the 200 day SMA

-- Prices are below the 20 and 50 day SMA; prices are just above the 10 day SMA

The long end of the curve (20+ years), is a bit different. They consolidated from the end of November/beginning of December to mid-May of this year. That's when they fell below support and moved lower.

On the three month SMA chart, note the following:

-- Prices are below the 200 day SMA

-- The 10, 20 and 50 day SMA are moving lower.

-- The 10, 20 and 50 day SMA have all moved below the 200 day SMA

-- Prices are in a clear downward sloping channel

-- Prices are just above the 10 and 20 day SMA. But prices have used the 20 day SMA as a pivot point for the last few months.

The short end of the curse (1-3 years) really benefited from the credit crunch. They rallied hard for nearly a year as traders parked their money in short-term bonds.

On the short-tern SMA chart, notice the following:

-- Prices are below the 200 day SMA

-- The 10, 20 and 50 day SMA are all moving lower

-- The 10 and 20 day SMA have both moved below the 200 day SMA

-- Prices are in a clear downward sloping channel.

All of these charts have clear downward sloping channels that have been in place for a few months. All also have downward sloping short-term SMAs (10, 20 and 50 day SMA). The bottom line the Treasury market has been correcting for a few months and the charts indicate we're in for more of the same.

Monday, June 23, 2008

Today's Markets

-- There was a lot of negative employment news today. Citigroup announced it would cut 10% of its workforce. GM will cut truck production by 170,000 units. United will cut 950 pilots

-- Although Saudi Arabia said it would increase production, oil still rose in price.

-- Harvard released a study that says the housing market will take a long time to recover.

The SPYs opened with a quick bump but trended down until a little after 11 CST. Then they rallied until a bit before 1 CST before starting a fall into the close. Short version -- with the market waiting for the Fed's decision on Wednesday expect the next day and a half to be like this.

The QQQQs opened strong but quickly fell. They hit one bottom a bit before 11 CST, traded sideways, and then rallied until a bit before 1 PM. They sold off to the 50 minute SMA and tried to rally but couldn't maintain the momentum. They sold off into the close. Note especially the high volume of the last two bars and the gap down.

The IWMs -- like the SPYs and QQQQs -- had a nice opening spike. They sold-off to the 20 minute SMA and then tried to rally from that level. However, they couldn't maintain the momentum and fell. They traded sideways until a little after 11 when they rallied a bit. But they couldn't maintain their upward momentum and they eventually sold off into the close. Note the increasing volume on the sell-off.

Market Mondays

I wanted to finish out the weekly look at the markets by looking at the daily chart of the QQQQs and IWMs

On the QQQQs, notice the following:

-- Prices broke an uptrend in early June.

-- Prices are below all the SMAs

-- The 10 and 20 day SMA are headed lower

-- The 10 day SMA broke through the 200 and 50 day SMA

This chart is neutral right now, although it is becoming more and more bearish.

On the IWMs, notice the following:

-- Prices are below all the SMAs

-- The shorter SMAs never broke through the 200 day SMA

-- The 10 day SMA is headed lower and is about to cross through the 50 day SMA

-- Prices punched through the 200 day SMA, but couldn't keep their upward momentum going.

-- Also note the possible head and shoulders formation.

-- Like the QQQQs, this is a neutral chart, but it's getting more and more bearish.