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Tuesday, November 25, 2008

The Squeeze Is Running Out Of Gas


Volume is shriveling as the Thanksgiving holiday approaches, and today was typical of a low volume day. We were threatening to head down all day, especially with drops in oil and the 10 year treasury yield, yet kept rallying on each test of support. Financials led today, energy weak.
One thing I am suspecting is that this was another bailout-induced short squeeze, and it is running out of gas.

The Nasdaq 100 was the laggard of day. One thing notable in these charts is how MACD is whipsawing of late, not giving reliable signals.

The Russell 2000 was in the middle, and hit a resitance level and stopped. This week probably will not get near enough volume to give us a decent hint as to where it is going.

The yield on the 10 year treasury dropped immediately upon the bond market open, and stayed down all day. These moves are absolutely huge, and not very comforting. Despite this, the SPX was positive, although it really didn't rally until after the bond market closed.

XHB is the ETF that tracks the home builders, which is the industry that made the biggest gain today. Since the home builder industry was the first to crack (back in July of 2005), it might be on of the first to reverse and indicate a market bottom is imminent.

I'll be back with an update tonight, later than usual.

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