Tuesday, November 10, 2009

Brief Morning Update

Since we're at such a critical juncture in the market I wanted to post a quick note as to what I see this morning. The Nasdaq 100 came within 3 points of confirming the Dow's new daily high this morning, but was unable to, while the Composite is further back. The XLF and Russell are much weaker today than the Dow, S&P and Nasdaqs, and so is the DJ Transports index which is down almost 1% and could possibly have completed a C wave ending diagonal and is selling off back in "bear mode" again. I'll be watching the Transports closely today. This fracturing and failure to make new daily highs by other indices is important for the bears because if the main indices make new daily highs, it will be very bearish if the XLF and Russell, and others, do not make new highs with them. As of right now, they have a long way to go.

The US dollar continues to be the story I'm watching closely. Last night late in the Asian session they bought US dollars against the british pound solidly, and it pushed the dollar modestly higher against the euro and swiss franc. However those gain were mostly reversed in the European session, and now the dollar is up modestly as the US session is bidding it up at the moment.

The door is still open for a swoon of selling to come in and reverse yestrday's bullish move, especially if the dollar can find some footing and rally hard later in the day. So far, the market is having trouble getting bullish follow through from yesterday and so far this morning's internals are showing that as you can see on the above listed data circled in red. Also of note, silver, which is often looked at as a "risk indicator" is selling off quite nicely and has been much weaker the past few weeks relative to gold. Now the two metals could just be leveling off old divergences, but right now we need to pay attention to all signs available.

The bottom line is that nothing extraordinary has happened today on either the bullish or bearish side, however the market is leaning to the bearish side slightly at the current moment. The burden is on the bulls to get some follow through from yesterday's rally to convince those on the sidelines that this rally is for real.

More later as structure unfolds

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