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December 10, 2008

Stardate 2008-1210

Ya, I know. Cheesy title. I've been watching the first season of the original Star Trek on Netflix. At least I didn't begin with "Captain's log." Anyway, today was another humdrum session. I would have liked to see stocks charge higher in the late afternoon, and the intraday patterns certainly showed potential, but it was not to be. Nevertheless, the market continues to act constructively, and I stand behind my two-day count from yesterday for a large move higher... no reset today, meaning I fully anticipate some fireworks tomorrow. Here's the setup:

index chart

We have a classic narrow-range consolidation on our hands: after a large move, two days of action tightly contained within the range of the larger move (narrow-range) occurring on declining volume. This action typically results in an immediate continuation of the previous move. The narrow range days also translate into corrective patterns on intraday charts:

index chart

The buck was down today, but not as much as we needed to push the market into a bigger rally. I thought we may see a swift move below 85 on the dollar index. Perhaps we'll get that tomorrow. In any case, the dollar's weakness lead to some firmness in commodities today, showing that some buying pressure is returning to various asset classes other than Treasuries.

As luck has it, I'm hitting the road again tomorrow, so I make no promises for full write-ups until Tuesday. Time permitting, I'll post, but otherwise, I'll sneak into the comments section with various observations.


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