After gapping higher at the open, prices broke the trend line started yesterday (a). They found support at previous lows (b) and tried breaking out but found resistance at the EMS (C). Even getting above the EMA couldn't give prices enough momentum, so they fell through support (e). When momentum shifter (f) prices rose but found resistance at the EMA (g), so they fell (f) on increasing volume.
The SPYs are currently at important support levels (a).
The IEFS (7-10 year treasury) are still in a rally (b). Notice the number of upward gaps the chart has printed recently (a).
After breaking through important resistance, the TLT has also printed several important upward gaps as well (a and b). Also notice how bullish the EMAs are -- the shorter are above the longer and all are rising (c).
Cattle is still in an uptrend (A), which has continued through important resistance levels (C) and consolidated gains along the way (B). After peaking, prices have fallen (d), but are still at elevated levels.
Copper is clearly consolidating recent gains (A).
Wheat is also consolidating gains (A).
Crude oil is currently at important support levels (A).
1 comment:
The GDP report is more bad news. However,with expectations so low, it actually beat expectations resulting in a higher stock market opening.
There is still a possibility that if the economy slips back into recession, that the single dip theory may still hold. Final revisions to GDP for the past year has not been made yet. If these figures are further revised downward, the NBER could still rule that the recession never ended. However, the evidence still indicates that the recession ended last summer.
The big question remains of whether the soft patch has reached a bottom or whether the soft patch is going to cause the economy to spiral downward. On one hand, the contractory elements of government policy (census workers layoffs, budget cuts at the local and state level, ending of the housing tax credit, and removal of stimulus money) is now or soon will be ending. Unfortunately, this has caused much consumer pessimism in the economy as indicated by today's Michigan Consumer Confidence Report. Moreover, uncertainty over the Bush tax cuts and budget still looms. This uncertainty may be keeping small businesses from hiring.
I suspect that whether the economy is now in a double dip recession or not, the economy will start to improve in 2011. Unfortunately, it will not happen in time to save us from a Republican controlled House and possibility even senate. The silver lining of a GOP controlled congress is that it will probably bring temporary joy to investors and we could see the same type of stock market rally that started the day after the election in Novemember of 1994 that could bring confidence back into economy.
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