Wednesday, July 14, 2010

Yesterday's Market

The big news yesterday was the long-end of the Treasury market finally falling below its long-term trend line.

Note the 7-10 year part of the curve is approaching this level as well.

The daily chart of the TLTs shows a large amount of negative information. Since topping at point (a), prices have only rallied twice -- at points (b) and (c). The rally at point (c) was quickly revered intra-day. Also note there have been three downward gaps at points (d), (e) and(f). In short, there are a lot of negative technical developments.

On the SPYs daily chart, take a closer look at the last few week's candles. After printing a really strong candle (a), prices have mainly advanced through inter-day movement as evidenced by the two gaps higher (b and c). The actual candles for the last few days (d) are pretty small.

Take a look at 5-minute chart. After the big bump at (a) prices have really moved into more of a consolidation mode. Notice the lack of intra-day movement in areas (b) and (c).

After falling through support, gold appears to be consolidating.

Gold's consolidation is better seen on this chart. Notice the lack of direction involved over the last 8 days -- prices are jumping from point to point, but primarily moving sideways.