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Tuesday, July 19, 2011


After looking at last night's chart I was fairly convinced we would get a bounce today, but not quite as big as the one we got. In one day we got back half of what we lost last week, and on volume, too. In fact, this would probably have qualified as a follow through day had this been day 4 of a rally attempt, but it is only day 2. About the best scenario for the bulls now is a light volume pullback from here, as it does appear we are at a minor resistance level, followed by another big high volume push. The bears, ironically, might be best served buy another big blast tomorrow and a drop in volume. 

Crude oil has barely budged in the last week, which in the face of severe market volatility might be a plus. There is a slight divergence I see here and don't know what it means: MACD is rising, but MACD histogram (a deriative of MACD, which is itself a derivative) is falling. I guess we will find out in a few days if it foes mean anything. 

Gold pulled back today after last week's breakout, still above the breakout point and working off an overbought RSI reading. GLD has a target price here (assuming the bottom pivot point is in the right place, which is debateable) of around 160, which translates to 1600 of gold bullion. I would not bet against it.

This is strange. The yield on the 10 year was up most of the day, as you would expect it too with the market screaming higher, but reversed midday and finished down, for no reason I can see and  totally ignored by the stock market. It may have been a treasury auction today, but the only one i have scheduled was a 4 week bill auction, and I'm sure that didn't do it. 

For a few weeks I have pondered whether or not the dollar was carving out a base here. I am starting to come to the conclusion that it is not, that is is forming a bearish wedge/pennant pattern here and is due for some more down side. A lot of somebodies might just be anticipating QE 3 coming.

The market had a very impressive rally today, but you have to wonder if it was too much too soon. We should find out in a few days.

I will have the new highs update shortly.

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