Friday, April 13, 2012

Morning Market Analysis

The SPYs sold off to the 136 level -- a total drop of only 4.4% from the 142 area.  Prices gapped higher yesterday, fluctuating around the 137 level, but rallied today from the 137 to the 139 level. 

The daily chart shows that prices hit resistance at the 10 and 20 day EMAs.  Assuming the move through that level, we see resistance in the 141 and 142 areas.

The QQQs are in the same technical position.  However, it's fairly standard to see prices hit previous trend lines and stall.  That means the mid-December - early April trend line a very important technical event.

The entire treasury curve has rallied: the IEIs have moved from 120 to 121.8 (+1.5%); the IEFs from 101.5- 104.5 (3%) and the TLTs from 110-115 (4.5%). 

So -- we have a weak equity market that, so far, is rallying technically; that is, traders are looking at the charts and saying, "we're over-sold; let's buy some cheap equities.:  The treasury market is catching a safety bid.

Let me highlight two other markets that should concern you:

The Italian market has moved from a high of 14 to 12.07 -- a drop of 14%.

The Spanish market has dropped from a high of 33 (early February) to 27.16 -- a drop of 17.69%.  Also note that prices are hitting resistance at lows established in late November.