Tuesday, February 7, 2012

Morning Market Analysis

Yesterday, the big news was a possible implosion of the Greek settlement talks.  This would have been extremely bearish, had it occurred outright.  But this also gives us the opportunity to look at how strong the current advance is by looking at the severity of the sell-off in reaction to negative news.  The good news for the bulls is the SPYs were down .13%, the QQQs, were off .08% and the IWMs lost .52% -- hardly a major sell-off.

The Russell 2000 was the biggest loser of the day.  But notice the price action was more or less a sideways trading session instead of a lower low/lower high sell-off structure.  This is actually good news for the bulls (at least so far).

 In contrast, notice the QQQs and SPYs have an upward bias to their trading, with the SPYs maintaining that through the day.   This is more goods news as these are bullish trends.

Energy is one of the largest market ETFs -- it accounts for about 12% of the SPYs.  Yesterday, prices made an advance through resistance -- an area they have been bumping against for some time.  While momentum is weak, notice the upward slope to the A/D and CMF, indicating money is flowing into the sector.


 Financials -- which have been a notorious laggard for the last year or so -- have now moved through resistance and are in a clear uptrend.  After getting caught-up at the late October highs, prices advanced on Friday.  With the exception of the MACD, this sector is also trending positively.

 The real commodity moves in the market have been coming from the industrial metals sector; agricultural prices have been contained.  However, the above chart of the grains ETF shows there is a lot of resistance in the 46-47 area, but once we get above that level there is plenty of room to run.

However, softs are still in a clear downtrend.