The 8 MA remains above the 34 MA so the bulls rule for the hours and days ahead. The late-day drop is trying to curl the 8 MA over to the downside so watch that after the open. The bears got nothing until they move the 8 down thru the 34. The red lines show the negative divergence that is firmly in place for this year. The big lumps on the left hand side for the indicators should be on the right hand side of the chart if the markets were strong. Note how the green lines show positive divergence that created the bounces but the RSI and MACD line in both cases want to see lower lows in price. On 1/8/13 that price is 1453. The SPX ikely needs to come down to take a look at 1453 again.
The late-day volume increase resulted in the drop into the close, more of that volume was selling than buying. Today's volume candle late day now compares back to the two high volume days to start the year. Their corresponding prices are 1461 and lower, thus, price likely wants to test this level at a minimum to see if the sell volume can exceed that volume at the start of the year, or not. The tiny blue circle shows a tweezer top where two candlesticks have long upper shadows that create the look of tweezers. This candlestick pattern typically marks either a top, or bottom, but follow-thru lower would be needed to verify the signal. Price is beginning to roll over so lower prices would be anticipated moving forward, probably down to 1461, 1457 and 1453 in the days ahead where the bulls and bears can sort out exactly who is in control. Watch the 8 and 34 MA cross. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
I have noticed that the last major corrections always occurred when the 10 year yield was above
ReplyDelete3%. We are so low right now, is it possible to go even lower? If there is a strong correction the
money usually goes to the bond market. Will it be different this time?
We have not seen a 10-year yield since 2011. You are correct. The disinflationary and deflationary scenario sees falling commodities, equities and yields (bond prices higher). And visa versa, inflation is represented by commodities rising, equities rising, and the yields rising (bond prices dropping). We are more in a disinflationary environment currently. The noticeable inflation is the food inflation over the last couple years but that should subside. So, yes, if the equity markets top here and sell off, the 10-year yield can go lower again, under 1.5% even lower. If the bullish equity move higher is correct moving forward, the 10-year yield will move above 2% and head higher.
Deletehttp://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/01/POMO%20January.jpg
ReplyDeleteWhat fresh hell is this? - Ande
Yep, Ande, that simply shows how the central bank is destroying the economy and perhaps, the country. Eating nothing but ice cream, cookies and candy non-stop is fun and enjoyable, until the stomach starts hurting. The key is the velocity of money and that is nill. No one wants loans and the ones that do the bank is making them jump thru ten hoops, the last one is a hoop of fire. So the money sloshes around, and continues to create asset bubbles, like the Dividend Bubble right now. It is all one big mess and a shame that capitalism was shunned in favor of bailing out favorite banks and companies. The decrease in trust that is now occurring month after month may present dire consequences in the future. Once everyone loses faith in the 'rule of law' system, since there is no rule of law if you have two sets of rules, that is when society breaks down. Watch your wallet.
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