Thursday, September 23, 2010

Yesterday's Market

While prices moved over key resistance at the beginning of the week, they have since retreated. Ideally, we'd like to see prices move above this and then "retest it," which means prices fall back to the line but don't do through. Yesterday, prices printed a strong downward bar.

On the 5-minute chart, notice that prices are at important technical levels: key levels set 5 days ago and Fibonacci levels.

Yesterday's action was pretty straightforward; prices moved in a downward sloping pennant pattern in the AM and the consolidated in a tight range during the afternoon.

On the other side of the street, Treasuries are again getting attention. The 7-10-year part of the market is moving higher and is about to test the upward sloping trend line of the last 5 months.

Prices at the long end of the curve are back above important levels.

For the last 4-5 months, the primary issues has been, "is the Treasury market taking money from the equity markets and is this preventing upward progress in the equities markets?" I believe the answer to both is, "yes." As such, the recent moves in the Treasury market do not bode well for the stock market, instead indicating prices are headed lower into the trading range they've been in for the last few months.

Gold is now meaningfully past previous resistance in area (a). This means gold is probably moving higher in a strong way.

Oil is still in a trading range (A). Prices have recently rallied to the 50 day EMA (B), but have since sold off (C). The EMA picture is slightly bearish: the shorter EMAs are heading lower and are below the 50 day EMA, and prices are below all the EMAs. However, the EMAs are also in a fairly tight range and prices have been in a trading range for almost four months.

Copper recently formed an upward sloping wedge pattern (A), which prices broke through two days ago (B). The EMA picture is very bullish (A), but the MACD is a more neutral than we'd like for a strong upward rally.