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Charts courtesy of stockcharts.com

Tuesday, October 18, 2011

Party On, Bulls

Once again, questioning IBD has lead to me having my head handed to me, although this time the damage was very light. They called a follow through day  last week (I believe it was Wednesday), and I was highly skeptical. That lead to today, which was an unquestionable follow through day, with plenty of gain, and while volume wasn't huge, it was a lot bigger than yesterday. Considering that we looked like we were in for a down day, it is that much more significant in that, from bottom to top, it gained about 2.5%. I felt this morning that if 1190 held, it would be off to the races, and it did. Couple that with the last hour bailout of Europe (no, really, this time they mean it), it looks like it's rally time. We still have one resistance level to get though at 1230, whih has now met the 200dema, so we are not entirely out of the woods, but today nailed the coffin shut on the bear market we entered in July.

 
Treasury yields are also showing an improvement in market sentiment, with the yield on the 10 year holding the 50dema today and bouncing up nicely. It still needs to get above that resistance  just above 23 to make a true believer out of me.

I don't know what time stockcharts updates the WTI chart and I don;t have a lot of time to wait, but the USO chart looks pretty much the same. This is also getting close to a tough resistance level, but has a lot of momentum and might just get thrugh it. I have mentioned this before, but the spread between WTI and Brent crude is still very wide (WTI spot is currently 88.34, while Brent spot is 122.76). While they are now performing about equally, at some point that spread is going to narrow. Sine most of the world uses either Brent or Saudi crude, they are more likely to see the higher prices. Sometime I will have to list the various grades of crude and their prices. There are a lot of experts questioning whether WTI is a valid benchmark, and may be giving false signals as to the true price of crude oil. One of the themes I persued when I started this blod was that peak oil was going to put a stranglehold on economic growth, and we certainly may be seeing that, especially in Europe.



Gold may be set for another drop here as the situation in Europe is resolved (no, really, it is). I'm looking for it to hit or come near the 200dema, which by that time we will be in the next Euro crisis.

The dollar index chart has not been updated yet, so I went with the UUP chart, which has a couple of problems. This is under the 200dema, but the dollar index is still above it's, and looks like it is poised for a bounce. This doesn't. Since this one tracks the dollar index (thus making volume irrelevant on this chart), I can;t draw many conclusions from this one. If I had to guess which way it was going in the immediate fute, I would say up, but if the Euro rallies (and it should, since everything there is fixed. No, really, it is) then the chat pattern here is moot.

IBD made a monkey out of me again. What they saw last week that I didn't sure baffles me, but they were right, So party on, bulls.

I will have the new highs update shortly.

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