Monday, September 13, 2010

Yesterday's Market

The treasury market has been a key reason for the stock market's lack of conviction. However, that may be about to change.

The 7-10 year area of the curve has pretty convincingly moved through key support line (a) -- see where prices are at point (b).

Depending on which trend line you use, the longer end of the curve has either moved though key support, or is sitting on key support.

In addition, TLT prices are sitting right near the 50 day EMA.

The underlying price/volume technicals for the IEF and TLT tell the same story. We're not seeing a mass exodus of dollars from either market; in fact, we're a slight increase in the amount of dollars flowing into both markets (a and b on bother charts). However, we are seeing momentum drop (c) in both markets.

Last week, the SPYs traded in two areas -- (a and b).

The SPYs are approaching a key resistance area (a).

However, neither the IWMs for IWCs are approaching key resistance areas. As such, I have to wonder about the strength of any SPY rally because we're not seeing a commensurate increase in the risk areas of the market.