Thursday, July 5, 2012

At Overbought Levels, Tomorrow NFP

Some important data influenced the market today, especially the China rate cut and the ECB press conference. While the first made the market rally higher, the second did quite the opposite, leveling price and bringing futures back near breakeven.

After going lower and then higher again in the morning, indices seemed to consolidate near the high of the day. In the afternoon there was a breakout attempt, but without any follow through. A small pullback towards the close left us in no man's-land.

Tech and small caps outperformed the Dow and S&P500. Being at highly overbought levels, it's probably wise for bulls to hedge their positions or start taking profits. Tomorrow the non-farm payrolls are announced, about the most important data of the month.

5m-chart SPY:

Daily charts DIA, SPY, QQQ and IWM:

Euro, oil, metals
Metals were sold heavier than equities/indices this morning. Silver was the biggest loser, down over 2%.
The euro got a serious beating, apparently Draghi's statement at the ECB press conference wasn't much appreciated. The euro lost over 1%.
Oil barely pulled back, it remains very strong after the rally from the last couple of days.

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