Saturday, June 25, 2011

Market Read for Week 072511-070111

Market Read:  Well we got our bounce at the beginning of the weak but we're still not feeling a sustainable risk bid. The market still feels risk averse and if you swing traded this week you had a nice wild ride with the gaps & go's and the strong fade action.  As the Ber-nanke upheld the end of QE and Europe continues to muddle along in a state of bailout dis-equilibrium investors are fleeing to safer harbors like the dollar and treasuries.

Dollar harbinger of risk: As @gtotoy says "it's all about the dollar bill y'all". The dollar finally broke the long-term downtrend line from last June. While it definitely looks like the next logical target for the buck is 77 I think it will digest and dip back to 75 before pushing to that target which should allow equities to hold the 200 SMA and stay range-bound. Over the coming month keep an eye on the debt ceiling debate. Geitner recently conceded that the day's of large US stimulus are over for the next decade and that should also provide a boost to the dollar.

Commodities getting QC'd (Quantitative Contracting):  Both gold and silver appear to be breaking down. Gold fell out of the rising wedge and lost the 50 SMA in the process. Silver is beginning to lose a long-term trend support line. Crude got a nice kick to the crotch from SPR release but prices have held 90 and a long-term support trend line so far.

The bounce in tech: Tech and small caps are still in their up channels. AAPL mirrors the QQQ's and despite the weakness on Friday is making higher lows and highs on the 15 minute chart. I bot the QQQ's around 54.40 thinking we hold this trend line support.

For the short-term we are trading in a range SPY 126.5-129.6 or the 200 SMA to the 20 SMA. Trade the range until we hold below 126. I'm about 90% cash but I bought QQQ & SPY calls into the close. Real small size just in case the market decides to bounce over the weekend.

Who could possibly rescue risk and the global growth story? 

China and the emerging world markets. I'll write a separate blog post about this.


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DX_F 15 minute






Gold (XLGD)

Silver (XSLV)

Long Bond (ZB_F)


McClellan Oscillator



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