Tuesday, June 8, 2010

Yesterday's Market

By far the biggest story yesterday was the rise in gold.

Gold gapped lower at the open (a) but then hit a big rally area where there was a massive volume boost (b). For the rest of the day, prices used the EMAs for technical support (c).

From a volume and price level, the last rally has been less than inspiring. The first rally (a) occurred with large volume levels and strong candles. Compare that to the second rally, where we have less volume and weaker candles (although there are some upward gaps).

Over the last few days, we've seen the technical indicators move into a more bullish orientation. While the A/D line has been advancing (d), we have the CMF and MACD giving us a buy signal as well. In short, this chart is becoming more bullish.

The markets traded sideways for most of the day yesterday (a), but sold off at the end of trading on a volume increase (b). Late day sell-off are never good as they indicate traders are nervous about negative overnight developments.

On the daily chart, first notice that prices are still above key support levels. While the over all trend orientation is bearish (a) (all the shorter EMAs are moving lower) the lack of a major drop in the A/D and CMF indicates we're not seeing a mass exodus from the market (yet). However, there is also a clear lack of momentum (d).

Finally, let's look at agricultural commodities as a group.

Prices have moved to new lows (b) by breaking through previous support levels. The EMA picture is negative (a) will all the EMAs moving lower and the shorter EMAs below the longer EMAs. Money is moving out of the market (c and d) and the MACD is clearly weak (e).