Tuesday, October 11, 2011

Morning Market

Oil is in the middle of a nice turn-around.  Prices have moved though the upper downward sloping channel line and a key price level.  They've also moved through the 10 and 20 day EMA and have hit the 50 day EMA.  The MACD has also given a buy signal.  Marketwatched noted the following regarding the oil market:
Overall, “there is a favorable set of fundamentals giving support to crude oil right now, including strong job retention in the U.S., more evidence that [third-quarter] industrial and cyclical earnings will come in strong, and a firming up of the demand story especially in the U.S.,” he said. “This process is taking dollars out of the money markets and putting them back to work in stocks and commodities.”
If prices move through the 50 day EMA, the next stop will be the 200.

Helping oil's rally was a massive sell-off in the dollar, which hit the 200 day EMA after moving through the 10 and 20 day EMAs.  The dollar sold-off on the EU pledge to provide liquidity to the banking system.  Obviously a weak dollar benefits commodities.

Stock are the in the middle of a strong rally.  From their low a little above 108 stocks have now rallied about 10.5%.  Notice that with the exception of Friday, prices have printed a series of very strong candles.  Prices have now moved through the 10, 20 and 50 day EMA.  The only drawback is the declining volume on the rally.

The 7-10 year Treasury ETF is in the middle of a very strong downtrend that has lasted 5 days.

The daily chart shows that prices have dropped sharply through the EMAs and trend lines.  Also note the 10 day EMA has now crossed below the 20 day EMA.   This is a pretty strong reversal in comparison to just a few weeks ago.  This could be an indication that sentiment is turning more aggressive.