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Tuesday, November 19, 2013

Damage Being Done

The selling wasn' that bad today, and volume was pretty low, so it does seems we may be in a relatively mild pullback, but underneath the surface, damage was being done. New highs were pretty sparse, and leading stocks (at least the ones I was looking at) got beaten up pretty badly. While the market can reverse at nmay time (as it has all year), it seems to me we are in for some more downside here, if only because we are quite far above the 50dma, and due for a retest. MACD is trying to whipsaw here, but it is slowly building up some downside momentum, and RSI made another lower peak. Those may not be the most reliable indications, but they also are not to be ignored.

Crude oil continues to drop, if at a slower rate. It continues to hold the critical 93 support level, but today closed below S1 on an up day, so that is now a resistance level. That makes a very narrow range, and it is quite possible we will spend the next week in that range. This needs to stay above 93, because a break could take this down to around 80. While that is great for consumers, for producers (an stock prices) it can be devastating.

Gold's up trend may be dead, but it very well may be finding a bottom. At some point, this will build a base and start rising again, but that could be weeks, months, or even years away. For now, there is nothing for a short term trader to do.

The Fed may have been behind the slow bleed of the yield on the 10 year Treasury, but that slow bleed appears to have ended. The subsequent rise has been slow, so it has barely affected stock prices, but watch for it try to pick up speed: that will affect stock prices.

The Dollar index has ended, for now, the down trend it has been in for months. It is too early to say it has established an up trend, but if it does, it will lead to a substantial correction in stocks. If it is a bounce before another move down, it's rally on. It is pretty much that simple.

The market is still following script, but I am very wary of what looks like a small pullback. Extensive damage is being done to leading areas of the market, and so far, I am not seeing new leadership come to the fore. We ought to see something in the next few days, otherwise, it looks like this is going to be more than a minor pullback.

I will have the new highs update shortly.

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