Good Morning Traders!
ECB Thursday led to a very constructive liquidation flush, which quickly bounced back at the end of the day. The DOW made another all time new high, and the DAX was also able to spike to new highs for the year before profit taking set in.
These types of “internal corrections” are keeping the bull market alive and healthy. There are no overbought indicators. The 5 day moving average of the closing tick is on more of a buy than a sell. The market has held up well despite the selloff in the oil shares. The Charts below show Good relative strength in shares like INTC, a stock that languished around 20 for decades. I know, my brother has worked for INTC for the past twenty years, and it had seemed like the stock was dead. Well, it certainly has come to life this year and made new momentum highs on the daily charts. MSFT, another heavily weighted equity in the indexes, corrected nicely on the dailies and can easily make a push to new daily highs. The Russell, which has been the laggard, shows a consolidating chart formation in the smae of a diamond. This can easily resolve to the upside. And lastly, the SPs and Dow: “positive consolidation”. Note how the “slow line” on the 3/10 oscillator has been correcting down as the price as still been making higher highs and higher lows.
Though Friday morning brings sensitive economic data, it does not appear that anything threatens the uptrend from a technical standpoint.
If there are any more “flushes” they can continue to find support. And any surprises can still come to the upside going into year end.
The trend of the dollar remains intact as well. Thursday brough a healthy short covering rally in the EC. It managed to close back above the previous swing low of 123.61. However, the charts still show a steady downtrending pattern on the 240 minute with a price rejection spike on a test of themiddle of the daily range. The Yen made a half hearted attempt to trade back to the daily 5 SMA but fell short. It continues to be the weakest market on the board.
Lastly: MOST UNINSPIRING award goes to GOLD. it failed to take out the previous day’s high when given all sorts of opportunity with healthy volatility swings in the financials. With a bit of imagination, it could be an A B C up rhythm on the daily oscillator. It found good resistance against a down trending channel line on the daily chart. Silver is in a similar situation: Three daily doji days, lack of any upside follow through after the dramatic short covering rally following a low liquidity holiday flush. Bears turn now – see what they give…they may just stay contained in the past 3 days trading range…..(yawn)
Bonds and Ten year notes….Turned out to be an outside UP day in the tens, as the bonds failed to confirm the downside on the early morning swing. I would normally say Sell Short day after two days low to high and the 2-period ROC poised to turn down….but the 120/240 minute charts still show a steady uptrend, the market DID have a good reaction down, and with Friday jobs data, I am not feeling lucky on sticking my neck out….
have a great trading day!
Markets in BO Mode: