Wednesday, August 25, 2010

Yesterday's Market

Notice the large number of failed rally attempts over the last 10 days; prices have just had a hard time getting beyond the 10 and 20 minute EMA.

Yesterday we have another gap lower, making five in the past week and a half.

The EMAs are now turning bearish (a), with the shorter crossing below the longer (especially the 200 day EMA). The A/D line hasn't seen a big exodus of money yet (b), but the CMF is starting to show people leaving (c). In addition, momentum is clearly waning (d).

\Prices are at clear support levels (a).

Notice that prices yesterday hit upside resistance at the 200 minute EMA three times.

Simply put, the market has a clear bearish tilt right now. Don't expect to see rallies maintain momentum beyond the 200 day EMAs.

Further confirming the bearish tone of the stock market is the bond market's rally, which is still in full force. The long-term uptrend is still in place (e) and the EMAs are still very bullish (a). Money is flowing into the market (b and c) and there is clear momentum (d).

After peaking at the end of April (a), lumber prices tumbled (b) and are currently consolidating losses (c).

Copper prices are correcting. They have either formed a flag pattern (b) or a downward sloping pennant pattern (c). Momentum is moving lower (d).

Copper could still be in a simple correction from their recent rally as prices have yet to break below major support. However, with the weakness in the housing market, I have to wonder how strong copper can be going forward.