Tuesday, January 31, 2012

Markets starting to look weak, but working off overbought levels

Quite the opposite of yesterday: we started the session with a gap up, edged just a little higher and then dropped some. Just when it looked like a bounce was coming, the market dropped hard and on volume, due to the Consumer Confidence number (see below), coming in at 61.1. A higher number was expected and the market clearly didn't like it... Case-Shiller Home Price Index was also below expectations.
All eyes are now on the job report, coming out this week on Friday.

So after the morning sell off, market bounced near yesterday's midday consolidation area. From there on, price crawled higher towards yesterday's close (for Dow and S&P). A nice basing pattern followed, but we couldn't really break higher.

Although the market looked rather weak today, we got a higher high and a higher low than yesterday. I'm not calling a top here, but we're not ready for a breakout either. With major indices all closing near breakeven, still no harm done.

5m-chart SPY:

Daily charts DIA, SPY, QQQ and IWM:

Euro: after a nice climb higher overnight/in premarket, the euro sold off big together with stocks, metals, oil.
Gold traded higher while copper and silver headed lower. Oil spiked up right before the open of the session (>$101), but then started to fall and even made lower lows while indices were making higher lows intraday.

Articles for this evening:
Settling Into a Familiar Pattern at Last
EUR/USD is a Battleground
Recognition of Supply: Euro Edition
Jaw-Dropping Chart
Housing Bottom Calls Continue Despite Evidence

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