Thread: tsptalk's Market Talk

Some favorable economic data this morning sent stocks rallying at the open, but by favorable we mean weak (not inflationary) so the market is deciphering it. Retail sales and the Producer wholesale prices were both weaker than expected.

This sent the dollar and bond yields to new lows (bond prices / F-fund higher) and stocks have given back some early gains as the indices still show fatigue after the two week rally to start the year.

Yields and the dollar are up but hovering near recent lows. Stocks continue to pullback from the wall of resistance on the longer-term chart.




No markets are exactly the same, but it looks like the current action resembles some late 2007 action...

It's trying to fill this morning's gap already. This is about where the morning rally failed. It's got to hold into the close, or it could be a fill and flop.

It's options expiration Friday so yesterday's selling and today's rally was all part of the game.

The yield on the 10-year is up and above one layer of resistance, but it looks like there was some unfinished business in the 3.5% area, but that gap has not been filled.





Yields could rise if the US does have a debt issue, but so far there's been little reaction

It's difficult to find a Wall Street pundit who isn't bearish, and when everyone is leaning one way, we know that the market likes to punish them.

They may eventually be correct, and there's certainly reasons to be concerned about stocks, but it looks Mr. Market is going to try to pull in more on the bullish side before it unleashes any fury.

Yields and the dollar are up this morning, making this morning's rally that much more curious, or maybe impressive is the word?

The Transportation Index is leading on the upside, which is a bullish sign, but it is once again flirting with the neckline of the inverted head and shoulders pattern so there is work to be done. It could breakout or flip over and refill the right shoulder as it did the left shoulder.

Small caps look quite similar so I would assume a similar outcome.

Both the S&P 500 and the DWCPF (S-fund) pulled back at the open to test their 200-day EMAs, then bounced. Can it hold today for a 2nd close above it? It hasn't done that in a while.

An early pop higher in yields and the dollar shook stocks up at the open, but the 10-year yield is now down slightly, and the dollar settled down as well, although still up.

This is such an interesting pattern on the dollar UUP chart where the 26.70 has been tested daily, but failed like a brick wall for almost two weeks.




And the S&P 500 has been doing the opposite:

As I mentioned in today's commentary Microsoft initially rallied after hours last night after reported earnings, but since I wrote that the gave poor guidance for the year in their post earnings conference call.

That changed everything and now the market is a little more aware of the economic roadblocks we may be facing. The dollar and bond yields (bonds prices up) are down on this development.

It's a down day after failing at more resistance for several indices. So, as we feared was possible, the right shoulders on many of these head and shoulders patterns may need more backing and filling like the left shoulder. The S-fund chart may be the best example but the Transports are very similar.

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