Wednesday, January 4, 2012

Nice bounce off support

Two days in a row, the S&P500 bounced near pre-market lows. We started the session with a small sell-off. As soon as we hit last week highs, the market reversed. It was a nice bounce, but the volume was rather so and so.
And that same volume bothers me on the daily charts. Plus, the Russell2000-index is showing a huge divergence with other major indices. Small caps are lagging quite a lot at this point...
Still, with most indices closing near the highs, the setup is looking bullish, except for the volume. Let's see if we get more of that tomorrow.

5m-chart SPY:



Daily charts DIA, SPY, QQQ and IWM:



Gold was strong, staying in the green with copper down >2.5% and silver also in the red.
Oil spiked on news that EU governments reached a deal in principle to ban imports of iranian oil. In the morning, oil pulled back together with stocks and went up again in the afternoon. We had a nice consolidation near the close of the session, and now oil seems ready to break higher (see 5m-chart below).
Meanwhile the euro suffered from speculations of Spain asking for IMF/EU assistance (Spain CDS blowing up). The euro backed down towards 1.29 before bouncing some.

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