Wednesday, January 25, 2012

Fade?

I would certainly be aware of the probability of fading this move in the market.

Here's a couple of things I've noticed.
 Here's a long term chart of yields, the market tends to gravitate toward yields. In October they were in sync, but as the top of the October rally formed, yields dropped before the SPX, the SPX followed shortly after. There still is a deep dislocation between the two( the yellow area being the area where the market looks exceptionally thin and dangerous).

 Intraday yields went the opposite direction of the SPX at 12:30

Financial momentum has been leading the market recently, it has totally fallen out of sync with the market post announcement.

And the 5 min XLF chart is now running a negative divergence.

The SPY 2 min still hasn't moved to catch up and confirm what I would call a parabolic move and if you've been here a while, then you know how I feel about parabolic moves, they usually reverse nearly as fast as they climb.



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