For the second day in a row we got no follow-through on the opening gap. Buyers did an impressive job of not letting the indices slip back into Tuesday’s post-Fed range. So it looks like Tuesday’s close may be the new line in the sand. I think it’s tough to be a bear as long as we’re above those levels — and above the blue trendlines I’ve drawn in on the S&P and Nasdaq charts below:
Trend Table
No changes
| Trend | Nasdaq | S&P 500 | Russell 2000 |
| Primary | Up | Up | Lat |
| Intermediate | Up | Up | Up |
| Short-term | Up | Up | Up |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I’m simply using the indices’ relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
{ 3 comments }
Things look great until they don’t anymore. I’m buying everything.
Michael,
Notwithstanding the tolerably good performances of the major stock market indices today— they seem to be straightforwardly printing a bull flag from the Fed rate cut— other things happened today that are worrisome. For one, long-duration treasuries (e.g., TLT) tanked
( while the yen (FXY) soared 
.
The treasury action doesn’t really suggest flight-to-quality unraveling on bullishness, does it? After all, stocks didn’t go up today— except precious metals, energy and basic materials (the commodity-related equities that never lead bull markets). Perhaps it was more like fear of inflation or fear of foreigners dumping US treasuries. You don’t dump treasuries to buy gold because you no longer feel the need for a safe haven.
I won’t try to sound authoritative about the yen carry trade unwinding, but I did observe myself that gains in the yen were very positively correlated with the recent steep drops in US stocks.
The 3-Month T-Bill Discount Rate ($IRX) was also down today rather substantially. It had plunged on the worse early days of the recent credit-crisis/stock-market panic.
Perhaps caution is still in order
. (BTW, I see that Dr. Brett also noticed the treasuries and yen action.)
If you compare volume on the decline vs. the rebound, there was much more on the decline.
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