Thursday, January 26, 2012

Is This Rally Coming To An End?

The day started like it ended yesterday, buyers bringing the market higher. But 1330 was the number watched in the S&P-futures and the market reversed close to it. From there on, it was a trendday down, sellers (bears) ruled today. Metals and oil however stayed in the green, although oil did go red intraday.

Yesterday's level where the market started to rip higher, was also today's support. A good bounce followed, but we still ended in the red on all major indices. But the range is still intact. As long as we don't break lower, the trend is still on. Just beware of such a break (or a fake move down, those can rip back up, higher and faster than anything else).

The Dow Jones-index held up better than S&P and Nasdaq, a first sign of trouble. Big caps 'leading' (= falling less than others) may indicate that the rally is coming to an end and that we could see a pullback.

5m-chart SPY:

Daily charts DIA, SPY, QQQ and IWM:

Metals, oil, euro, they all outperformed the indices. While stocks looked weak, gold and silver barely retraced and are still higher than yesterday's close => bearish for stocks.

Some stuff to read this evening:
Weak $, many say risk on, I say self defense
Are We Overbought?
Elusive Resistance Found With Gap Fill?
Where Are All The New Traders Going to Come From?
The More Things Change...
Are Stocks Really Up This Year?
EURUSD and the January Effect - An update

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