Monday, July 12, 2010

Yesterday's Market

Every week I use the performance chart function over at to see what areas of the market are rising relative to others etc.. Last week stocks and commodities were the clear winners while bonds -- especially the long-end of the curve -- sold-off. While this is only a week of data, it is the first time we're seen the risk trade top the charts for the last few months.

So, let's start with the equity markets.

Prices gapped high on Tuesday's open (a) but then fell for most of the day (b). The real move last week came on Wednesday when prices rallied for most of the day (c) and ended the day at a peak on strong volume. Prices gapped higher at the open on Thursday (d), traded modestly lower for most of the day but then rallied to close near the open (e). On Friday, prices were in a very tight range for most of the day (f), but broke through resistance (g) near the end of trading.

Last week's rally shows strong candles, but notice the declining volume for the small rally. That indicates weaker participation, which is technically bearish.

From a technical side, notice the 10 day EMA is rising and should cross the 20 soon (c). However, this is a fairly regular occurrence and therefore has less technical significance. The A/D line is remarkably stable (a) indicating a lack of flow from the market. But the CMF (b) dropped over the last sell-off. However, the drop was not that large. Bottom line: we're not seeing the huge out of market move you would expect for a sell-off, at least according to the volume indicators.

The long-end of the Treasury market is still above its upward trend line (a), but prices have fallen below important technical support (b).

Last week prices gapped lower three times (a, b, and c) and moved through important technical support (d and e).

Gold has fallen through its trend line (a) after its inability to get through the 122-123 area (b). Prices are now consolidating below the trend line (c).

Notice that industrial metals are still in a trading range as well, stuck between areas (a) and (b).