Markets Up, Down, and All Around

qd0810.gifThe stock indexes were another yoyo today. The Fed kept injecting money into the system, the news was full of talk on the sub-prime slime, and the daytraders were taking advantage of the chop with wild swings with wider than normal bar ranges on the intra-day charts. Momentum turned down on all indexes as of Thursday’s close, and then the indexes gapped down on the opening on Friday. This made it a bit difficult to get positioned for a drop without looking at intra-day charts and getting positioned on Thursday. On the QQQQ you can see the gap came in around the area of those tails left on the daily bars about a week ago. There was a little follow through, but selling dried up and prices tried to rebound, but was only able to settle near the open. The best action is to stand aside until momentum turns back up. The regression trend is still up, although with prices below the band so probably not a good idea probe the long side yet, at least off the daily charts.
qw0810.gifTo get a little longer view its sometimes best to stand back a little. Here is the weekly chart. The uptrend here looks much healthier, with the momentum indicator below showing a nice divergence to indicate possible down move, but now in the oversold area. Most important for the way I define the trend, is the prices are still holding above the regression line and the upper band of the channel.
spd0810.gifHere’s the daily S&P spider. You can see how choppy the daily price bars have been over the last couple of weeks. The VIX (volatility index) hit a high today of almost 30. It was around 10 last February, and around 15 at the end of July. It’s easy to see why after looking at these unpredictable price bars. It is almost impossible to call the daily swings, other than just to say the trend is down. It is encouraging that the low of last Monday held, and that there was no follow through to the downside after the open. The S&P also closed higher than the open, although momentum is still down, and trend is obviously down.
spw0810.gifAs with the Qs, the weekly chart doesn’t look nearly as damaged as the daily chart. This was certainly a steep correction to the upmove, and was a very wide range bar with a week of follow through. So far the uptrending regression curve has held this decline, and is still trending upward. And, the momentum indicator is deeply oversold.
Here is the daily December Gold chart. It was a fairly large upday today, but didn’t quite make up the loss from yesterday. I squeezed the bars tight to show how this market has been trending sideways for some time. There were more tradeable swings earlier in the year, but the swings look tighter recently. Maybe its coiling up like a spring and will break into a directional trend soon. I would think with the monetary uncertainty that gold would be moving up sharply. When it doesn’t respond to news that would normally be bullish, then watch out below. Goldbugs are explaning that the failure to rally with the news is that traders are liquidating a profitable asset to pay for their losses. I don’t believe that for a minute.

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