Friday, July 20, 2012

Morning Market Analysis

Let's start with the entire US grains complex, which shows prices are now at yearly highs.  All have moved through key resistance levels and have incredibly bullish alignments in their EMAs.  At some point, prices that are going parabolic like this have to come back to earth -- or at least fall to the 10 or 20 day EMA.  However, given the weather situation, this will only be a buying opportunity.

The dollar is trading in a sideways pattern, with 23 providing resistance and 22.4 providing support.  The decreasing MACD is a sign of consolidation; as prices moved higher, momentum increased, but now as prices consolidated, momentum slows.  The 50 and 200 day EMAs show us that the overall trend is still higher (both are rising), but the CMF indicates traders are leaving the market -- which, given the overall price level, is probably a sign of some profit taking from the May rally.

The weekly chart of the junk bond ETF shows that people are still reaching for yield.  The EMA picture is still rising and the MACD has given a sell signal.  The only negative on the chart is the CMF, but that is close to moving into positive territory.