Thursday, December 2, 2010

Yesterday's Market

Yesterday, prices gapped higher at the open (a) and then formed two consolidation patterns for the rest of the day; a triangle in the AM (b) and a rectangle in the PM (c). Also note the MACD (d) which jumped on the gap higher but then moved lower for the rest of the trading day. This is a standard pattern for a consolidation day.

On the daily chart, notice that prices moved through key resistance yesterday.

The Treasury market was a mirror image of the equity market. Prices gapped lower at the open (a), and then rose a bit during the AM. However, as soon as prices hit the 10 and 20 day EMA they started to move lower (c), and did so for the rest of the day. Also notice the MACD (d) was rising for most of the day.

Treasury prices continue lower (a). Also note the EMA picture; the shorter are below the longer, all EMAs are moving lower and prices are below the EMAs (b).

Notice that equities are rising and bonds are falling. This is indicative of a bull market, as money leaves the bond market (which is considered safer) and moves into equities (which is considered riskier).

While the dollar has recently enjoyed a strong rally (a), notice it has hit resistance at the 200 day EMA (b).