Tuesday, February 26, 2013

Morning Market Analysis

Thanks to the poor result of the Italian elections, uncertainty has returned to the markets.  The US markets spent the day selling off.  Treasuries caught a safety bid while the Italian and Spanish ETFs sold off sharply.

Yesterdays' sell-off was technically devastating.  Prices gapped at the open and then continued to fall.  They trend to rally late on the AM but hit resistance right after lunch.  After making a second fall, they traded sideways until about an hour below the close when the dropped hard, printing two very long bars.

I've included a daily chart of the SPYs with Fib levels for reference.  Note that yesterday prices sold off to the top Fib fan. 

Yesterday, the long-end of the treasury market caught a bid in a big way, printing some very strong bars.  Prices moved through all the EMAs, stopping just below the 200 day EMA.

Both the Italian (top chart) and Spanish (bottom chart) ETFs tanked yesterday as a result of the Italian election results -- or lack thereof.  The results indicated that the EU may be headed towards another period of political uncertainty, increasing the stress in the region.