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Technical Update: Monday Market Review

  • Written by Syndicated Publisher 71 Comments71 Comments Comments
    October 4, 2011

    “The waiting is the hardest part. Every day you see one more card. You take it on faith, you take it to the heart. The waiting is the hardest part”

    – Tom Petty, The Waiting

    One of if not the hardest part of trading is letting a position do its thing. I remember early in my trading career as soon as something was green I’d sell it only to watch in disgust at all the profit I left on the table.

    The current market for those who suffered through the whipsaw action of the past few months while staying short is a perfect example. Nothing said to cover shorts today even with markets ramping (ES) on “good” ISM news.

    Bonds were not buying it (although people were buying bonds). Commodities certainly were not buying it and the USD was catching a bid. Not only did the SPX close below the August lows it also put in a nasty reversal closing on the low of the day. I continue to remain short and playing this market one day at at time.

    Below are a few “market realities” and many random charts.

    Market sold off on “good news” with ISM above consensus.

    Russell 2000 took out August lows.

    EEM testing May 2010 lows.

    Transports took out the August lows and testing the summer 2010 lows.

    Bank Of America (the largest bank in the US) is now a $5 stock.

    BID took out the August lows and testing the summer 2010 lows (remember this chart).

    SPX

    The August low is no longer as it was replaced by the October low, which by the way was the closing print. Next support is 1,040.

    10 Year Treasury

    Orderly decline in yield continues. Big move today down 14 basis points.

    30 Year Treasury

    Operation Twist put a bid in the long end of the curve. Yield down 16 basis points today.

    Copper

    Copper continues to rollover. Down 29% since September 1. How many long leveraged funds are blowing up?

    USD (DXY)

    Never thought I’d be saying USD looks poised to move up another 10% from here but COT data, EUR weakness and the chart below shows it as a high probability.

    EUR/USD

    Euro is a mess. Today it took out support as if it never existed. Next support comes in at 1.287 (January low).

    Images: Flickr (licence attribution)

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