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Charts courtesy of stockcharts.com

Tuesday, October 11, 2011

Another Shot At 1200

It looks like the first line of resistance we are going to run into is 1195, as the market sure slowed down when it hit it. Of note, however, is that there is no sign of big selling as we get into the zone where selling has picked up of late.  Volume is still shrinking (and making a mockery of yesterday's excuse of "Columbus Day"), so both buyers and sellers are waiting for something, perhaps a resolution to the Euro crisis of the day. We have probably run out of short sellers to cover (although we are probably getting a fresh batch now, who will be forced to cover on another move up), so barring any major news, there isn;t really anything here to propel the market higher.

I had to wait for the WTI chart to update because this chart differs significantly with the USO chart, whih looks quite a bit more bearish. This one looks like a bottom is being carved out. Even though it is hitting resistance at the 50dma, it did not drop much after hitting it, which is fairly bullish. MACD is now moving back up, so this has some momentum here, and is very likely to test the 200dma. 

Gold is also looking reasonably bullish here, with a MACD that is beginning to move up. I haven;t been doing much with my options simulator lately, but options mayu be the best way to go with this: some cheap calls could make big gains if this starts moving higher, and at this point I don;t see any reason why it won't.

Treasury yields are also rising pretty dramatically, and today the 10 year gapped over the 50dma. notice that MACD has been moving up while the yield was moving down. I have been noticing MACD histogram is a very good momentum indicator, but it hasn't been working very well here.
 
It hasn't worked here, either. I don;t follow the forex or bond markets very closely, so I don't know how well they follow technical indicators, but it seems they don;t follow them nearly as well as the stock market.  The USD ha not been updated yet, but the UUP chart is a terrible mess. It is down near the 200dma, so this is probably pretty near it as well. If there is a resolution to the current Euro crisis, this will likely drop lower, that is, until the next Euro crisis, which will probably be next week.

The short covering is probably done, so now the ball is in the buyers' court, and so far they aren;t biting. They are also, however, not selling, either, so this market is basically in a situation where it can go either way, or it can just go nowhere.

I will have the new highs update shortly.

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