Tuesday, May 1, 2012

Big Rally, But Big Pullback As Well

At 10 AM, the ISM-numbers came out and they were better than expected (although not that much). The result was a huge buying spree that added 1% or more to the major indices. The buying came with big volume, which was good news for the bulls. But after half an hour, the volume started to dry up. And although price kept going higher and the afternoon pullback was not that deep for the Dow and S&P500, there are some reasons for concern. The pullbacks in tech and small caps were deeper (they gave up almost all gains from today), stocks like AAPL couldn't hold on to their gains.

Another point is that the Dow is making new YTD highs while other indices are not. Then again, it also was the first index to make new highs in December 2011, and look what happened next...

To me, the ugly candles in tech and small caps don't look promising. There just weren't enough buyers to keep the morning rally going. And that's not a good sign at this level. Difficult to say what will happen next, but I'm not keen on any long calls at this level.

5m-chart SPY

Daily charts DIA, SPY, QQQ and IWM:

Euro, oil, metals
While equities rallied, gold went lower, although just slightly. Copper however managed to stay in the green, silver was near breakeven, just like the euro.
Oil finally broke the 105-resistance and ended above 106. While 110 be next?

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