Lots of technical damage done on Friday across multiple asset classes. From a major move lower in copper reminiscent of the August equity selloff to 60 year lows on 10 year intraday yield a lot happened.
Below are a number of charts in no set order. The SPX did manage to find support at the bottom of the bear flag which is a small victory for bulls. I would also say this market is vulnerable to a short squeeze on Monday should there be no Greek default. The overall trend clearly remains lower but as we have witnessed it’s important to be prepared for selloffs as well as bounces.
10 Year Yields
Now at a multi decade low yielding 1.92%. Below is a 20 year monthly chart to put this yield in perspective. I continue to believe this is not all “fear” driven for the simple reality that equity selling has been orderly and the most liquid, widely owned stock AAPL is only 5% off its all time highs.
The euro is a mess right now. It took out support with relative ease today. Next support comes in at 1.36. Similar to the USD (see below) it does seem a little to parabolic and due for a bounce but oversold markets can stay oversold as we know.
The dollar is clearly in breakout mode right now. Next major resistance is not that far off though at 78.10 and that should be very difficult to break through. I would not consider this a change in overall trend with the USD but short term it does look rather bullish although it is going a little too parabolic.
A beautiful bull flag is in play and based on the inverse correlation this supports further selling in equities.
The bear flag and head and shoulders pattern are still in play. The SPX was able to bounce off the bottom of the flag and neckline. I find the gap open and below the 20MA (middle Bollinger) to be rather interesting though.
Extremely bearish action in copper today down nearly 4%. Interesting to note today’s candle looks similar to that of August 1 when equity markets began their big move lower. Copper does tend to lead equities.
Overall a rather bearish day today. As a reminder, considering where the SPX found support and the lack of conviction among shorts that barring no Greek default or other major news that a decent bounce is possible on Monday. I say that simply to prepare you for both possible outcomes. If holding September options, primarily puts you need to consider that into your strategy of when to sell.
Enjoy your weekend. Rest up for it should be another volatile week ahead.
From Market Recap Friday September 9, 2011- Macro Story.
Images: Flickr (licence attribution)
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