Stocks, Gold, Oil lower

All the markets moved lower today. It was another choppy day in the stock indexes, as most rally attempts were met with renewed selling. A fairly strong rally in the final twenty minutes lifted the averages off their lows, especially in the Nasdaq 100. Trends remain strongly down, although short term momentum is still trying to recover from oversold levels. The graphic to the left was from a site discussing the China bubble. You can see the traders in front of the uptrending chart, and inside the bubble – very close to the pin. I think this says it better than putting up another chart.
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The chart to the right shows the Nasdaq 100/QQQQ in the upper part and the S&P 500/SPY in the lower. It is interesting how the rally attempt yesterday opened right at that declining blue line I drew a couple of weeks ago that represented the lower part of a bearish broadening formation. The market sold off right from the open and closed right above the three day pivot. Today was a little more of a narrow range and traded on either side of the three day pivot, with a close slightly under it. The S&P in the lower graph opened a bit over the three day pivot and went quite a ways under, but closed a bit off the lows. The trends are clearly down, however if a rally can get started and hold enough to take prices back over those reference lines, it would relieve the oversold condition and present a better short entry point. Somehow it just seems too convenient for the market to just keep falling apart from this point without first trying to entice the bulls back in. A break of the lows of four days ago would be my least favorite outcome, but if that occurred the markets could extend another leg down similar in duration to the last. But beware the fake-out. A test of those lows could attract buyers and trap shorts. I would rather go short from an overbought reading in the short term momentum indicators, which would require more attempts at some upside. A test of the August lows seems more and more likely, but gut feel says it won’t be an easy one way trip back down.
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The gold market let out a little more air today. The trend is still up and momentum is now quite oversold on a very short term basis. As bullish as I am longer term, I just have to think this market will pull back substantially. I’m not so bearish on gold as I am bullish on the dollar. That bullishness is based purely on sentiment, not fundamentals. Although fundamentally I do think some of the bad rap the dollar has gotten has more to do with some currencies having high interest rates that are not based on the soundness of their economies as much as their inflation rates.