blackmarkt-trader: Market Read for Week 060611-061011

"Real mastery of market patterns follows naturally once a trader has an intuitive sense of buying and selling pressure, but intuition only grows out of constantly thinking about market structure and exposure to tens of thousands of pattern variations." ~ Adam Grimes @AdamG_SMB

Econonmic Week Summary: http://www.calculatedriskblog.com/2011/06/summary-for-week-ending-june-3rd.html?utm_source=feedburner&utm_medium=twitter&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29&utm_content=Twitter

Upcoming Week Schedule: http://www.calculatedriskblog.com/2011/06/schedule-for-week-of-june-5th.html?utm_source=feedburner&utm_medium=twitter&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29

Overall Market Read- Well as I suspected it was a weak week for the markets as both equities and the dollar got pounded as risk aversion was in full effect. The volume patterns of late have signaled quiet distribution as down days on average had heavier volume while up days had very light volume. Without the Ber-nanke put, the on-going bailout mess in Euroland, summer sell in May effect and the rather surprisingly quick deterioration of US econ news it is time to lighten the risk load. We got that nice bull trap on Tuesday as the volume on that break out day was suspiciously low setting the stage for 3 straight days of selling in which we lost the 100 SMA on most major indexes. I don't think equities completely roll over here but think we're going to enter the summer chopfest. I'm expecting a bounce early this week possibly starting on Monday (took a couple longs on Friday) as we just had 3 straight consecutive down days, SPY hit the extreme BB on the daily and at the bottom of TL support.

On the commodity front thanks to dollar weakness we're seeing relative strength with nice bases being built in crude and silver while gold continues to march higher. Investors seem to think 100 for crude is the sweet spot and people are beginning to spot a possible inverted H&S in silver. Copper seems to be basing above TL support with the 50 SMA acting as resistance. With Western economies seemingly succumbing to the sucking forces of deflation emerging markets like China may be able to ease their monetary tightening and resume inflationary growth.

SPY-

Last summer's SPY sell-off into an inverted H&S

Hourly

QQQ-

Hourly

IWM

Hourly

Dollar- Dollar futures rolling right back over. The dollar/risk on and equities correlation has flipped and we're now seeing selling in both. But the commodities space seems to be responding well to a weaker dollar.

DXY0

DX_F

Long Bond- The long bond has had a nice run out of the multi-month consolidation base as investors move to safety. When we get an equity rally it will be interesting to see how much of a pullback bonds get. If it's shallow I think equities have more downside in store but will be looking at other clues.

ZB_F