Market Makeup

A rundown of various market themes for tomorrow's trade.

Despite the hefty haircut in the QQQQ's, my NASDAQ indicator is still bullish. Buy the dip is still in play until I see some O's, but I'm taking very small positions.

The BXM/SPX ratio is bearish as long as it is printing X's. Nevertheless, it is approaching resistance and a 10sma downtrend.

After mentioning HYG here, I rode today's wave up and I'm adding to it as the tape presents itself. JNK also has breakout potential.

Another bullish indicator is the rising summation index.

The first sign of potential inflation is here as the spread trend between the 30Y Treasury and Gold begins to loose momentum.

Today's action was a little hairy for a buy the dipper, and if there wasn't such a strong late day rally, I'd be pretty worried. Tuesday will be critical as further weakness will likely make my SPX indicator bearish. Smooth trading to all, and happy Hanukkah to my fellow tribesmen.

Rendering Ratios

One final chart post for the weekend.

My NASDAQ indicator keeps printing X's signaling lower volatility and more bullish stocks.

The intervention I was looking for here is underway. Don't fight the BOJ until you see another X printed.

Gold and precious metals like silver continue to put in nice uptrend work. This remains the best sector for any long bets.

More NASDAQ stocks are trading above their 50dma on lower volatility, another bullish sign.

The only thing holding back the inflation trade is the strength of long term Treasuries.

Nothing too crazy in this mix, but I like to keep track of EVERYTHING. Sometimes it feels like busy work, but you never know where future insight will lie. Next up, getting my X-mas wish list ready.

Internal Investigation

A few ratios to discern the state of the market.

My NASDAQ indicator printed a new X today despite today's fall. Lower volatility is bullish.

The BXM:SPX ratio is banging against the 10sma again, hopefully it will act as resistance and the spread will turn around (bullish).

The continuing fall in Treasury yields is quite discomforting. Either it is fear or a part of some fund strategy that I have yet to understand.

Some suggest that the VIX:VXV is signaling a sell, but I don't see that quite yet.

Although oil is falling in dollar terms, it has yet to make a new low in gold. I'm cautiously bullish on oil, but not with much confidence.

Mixed messages all around, but I'm still buying the dips. Risks are still very high, and the potential for government currency intervention makes prediction particularly difficult.

Just for the Record

According to my NASDAQ indicator, the market is stronger than the pre-election rally.

Buying dips in sectors breaking out of bases is the way to play.

At some point I'll make a rundown of sectors I think are hot, but gold miners are clearly the group to beat. A return to prices seen before Lehman's closed is possible before a resumption of the bear market. Emerging commodities markets and growing countries stand to benefit in the coming rally, all at the expense of the US dollar and Treasury prices. The market still exhibits high risk, but volatility is declining and there are an increasing number of bullish stocks. Trade what you see, trade well.

State Of The Market

A few market signs for the lost. The following precipitous graph is an example of the impact the financial crisis is having on the real economy.

The BDI indicates how much shippers get paid for carrying freight. Due to the unwillingness of banks to write letters of credit for merchandise, shipping is mired in a death spiral.

US Bonds continue to outperform US Equities.

The NASDAQ continues to hold on by the skin of its teeth, but with the risks so high, holding equities overnight is a game for people much braver than I.

Less NASDAQ stocks are above their 50dma, but if the index doesn't collapse tomorrow, we could see a short squeeze.

Nevertheless, the NAMO is a tad overbought, so I expect choppy trading for a day or two. Time to take photos, sculpt, and learn to play music.

The market is still volatile and thus provides great opportunities. On the other hand, my trading costs are starting to rise as I get whipsawed and suffer prolonged cognitive dissonance. I'm trading with small amounts, trying to find/keep a rhythm, but nothing seems quite clear after today.

P.S. Has anyone else in the blogosphere suffered ISP problems during very volatile market days?