It appears we have given back all we got from the FOMC announcement a couple of weeks ago. On the positive side, the selling was stopped at the 20dema, which has not even been tested since the follow through day in September. A successful test here will be quite bullish, and we will likely hit a new high within a couple of weeks. A break will probably set off a wave of program selling, leading up to a test of the 50dma (which one, I don't know, we have been away from the 50 for so long it is impossible to tell if the traders will be keying off the exponential or simple average). Low volume today leans toward the bullish case, but that can easily change at any time.
The Nasdaq is also finding support, so far, at the 20dema, but broke the support level at the gap. It might hold here, but I would be prepared for a test of the 50.
The Russell 2000 is holding up rather well, is still above the 20dema, and the trend is intact. In a bearish scenario you would expect thi to lead the down leg, and it isn't, which may be the best argument yet for the bull case.
If you look at the right angle at this chart, today's candle almost looks like a middle finger the bond market is sending Bernanke's direction. We are seeing the bond market's reaction to a new round of quantitative easing, and it is no confidence. If this continues, it is going to be trouble. Big trouble.
The yield on the 30 year is not quite as dramatic, but the trend is definitely up. Is the bull market in bonds over? It's starting to look that way to me. Kiss the housing recovery goodbye.
The story is becoming the bond market. Tomorrow I will try to get a post up looking at some of the bond funds that have been imploding lately. There weren't many significant breakouts today, and I'm a little short of time, so no breakout charts today.
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