Monday, November 23, 2009
Watching the Dollar, Stock Market Still Split
The market surged this morning as has been the case with recent Mondays as of late. A CNBC FastMoney trader has been saying that Monday's rallies have been due to Money Managers having available funds at that time and doing all their buying. Today was no exception. The financial news wires said the rally was on some housing data that came out this morning, but the EUR/USD rallied all throughout the Asian and European sessions before the housing data even came out this morning, signaling a big rally in the stock market was going to occur this morning anyway. So as usual, the "news of the day" has very little to do with market movement despite what the financial news folks say. EWP states that crowd psychology and the wave structure create the news, not the other way around. Today is a good example of that at work.
Internals are very strong this morning, suggesting only buyers in play today. It's a holiday week so volumes will most likely be light, perhaps giving the bulls an opportunity to rally this market big all week. The key will be to see what happens when volume returns. The last few times big volume re-entered the market, it resulted in selloffs. Today the Dow made a new daily high while virtually every other index did not. Again, as this market shoots higher, watch the behavior of the Dow compared to the other secondary indices and sectors. And keep in mind my post on the significance of this "fracturing" occuring right now that's causing the Dow to outperform everything else (see post here). I'm short term bearish as long as the non-confirmation between the Dow and S&P remain intact which means the S&P needs to continue to stay beneath 1114, however I have low confidence that will hold at this point.
An interesting structure and opportunity exists in the AUD/USD. Elliott Wave International and FXCM analysts have pointed out the clear 5 wave decline in the australian dollar/US dollar (AUD/USD). The pair has rallied to the 61.8% fibonacci level which presents a great opportunity for the bears to get short at current levels (0.9253) with a stop above 0.9410.
I'm visiting family and friends this week so I won't be posting much this week other than significant develops that unfold as I see them. Have a great holiday week everyone!
PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.