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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
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* If the dots don't connect, gather more dots until they do...or, just follow the $$$...





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Friday, February 24, 2012

Money Flow for February Week 4

First of all, I apologize for the length of my post, but I have plenty to say...I appreciate you allowing me my indulgence and intrusion into your time.

Further to my last weekly market update, here is a summary of where money flow ended for Week 4 of February, 2012.

The Weekly charts below of YM, ES, NQ & TF show that the YM, ES and NQ made a higher weekly close than the prior week, and that the TF made a lower weekly close...it's also the only one not to have made a higher weekly close in February since Week 1...one to watch for possible developing weakness. The NQ is climbing along its upper channel line resistance for the second week in a row.

The three Daily charts below show that Stocks Above 20-Day, 50-Day, and 200-Day Averages are still trading at or above near-term support levels...a lower support level was re-tested on the 20-Day Average chart and stocks bounced back up to close within this new support level. It will be important that these support levels be maintained on all three charts to confirm any further advance in equities...since it appears that weakness has set in on the 20-Day Average chart, it will be important, in the short-term, for stocks to rebound sooner rather than later, otherwise they risk further downside pressure.

The VIX fell by 4.84% this past week, as shown on the graph below...one to watch to see if equity strength continues, although it popped up on Friday as it sits just above major support at 15.00.

Oil was the big gainer in the Industry Groups for the week, followed by Biotech, Brokers, and Gold/Silver, as shown on the graph below. I've added the S&P 500 Index to the equation, and its gain, in comparison, was miniscule. Banks were the big losers.

As reflected above, the Energy Sector was the big gainer, followed by Technology, Consumer Staples, Healthcare, and Utilities, as shown on the graph below. Financials were the big loser. It would appear that the markets were moving to a more defensive position, compared with the miniscule gain in the S&P 500 Index.

As shown on the graph below, the Commodity ETF was the big gainer, followed by Emerging Markets, and the Chinese Financials ETF. The U.S. Financials ETF was the big loser, followed by the Agricultural ETF. Buying in the European ETF was miniscule (and was not reflective of the buying in the Euro), as was in the S&P 500 Index. Whether buying continues in Emerging Markets remains to be seen in the face of a potential move to defensive positions.

As shown on the graph below, Silver marginally outpaced buying in WTI Oil and Brent Crude Oil, followed by Copper and Gold. Gains made on the S&P 500 Index were miniscule in comparison. If the buying continues in the Chinese Financials ETF and Emerging Markets, and if it strengthens in the Major Indices, we may see Copper rise further.

As shown on the graph below, minor gains were made in the Major Indices, except for the Dow Transports (which lost for the third week running). There was minor buying in the High Dividend-Paying Stocks ETF, and comparatively higher buying in Emerging Markets and the Corporate Bonds ETF...with higher oil/gasoline prices looming, we'll see whether buying interest continues in these instruments.

As shown on the currency graph below, the Euro gained the most, followed by a slight rise in the British Pound and the Aussie $. The U.S. $ lost the most, followed by the Canadian $. If the buying continues in the Chinese Financials ETF, we may see the Euro rise further...however, we'll see what effect, if any, higher oil prices may have on the Euro. Also, since the U.S. $ did not lose as much as the Euro gained, we may see a firming in the price of the U.S. $ if oil continues to rise.

Since it seems to be all about Oil this week, I've put up a few more charts, and as a follow-up to what I was saying in my last post.

Brent Crude Oil closed at 125.47 (above major resistance), as shown on the Daily chart below.

WTI Light Crude Oil closed today at 109.45 (just below a minor resistance level of 110.00), as shown on the Daily chart below.

The Daily comparison chart of Brent to WTI Oil below shows that Brent reversed its decline against WTI today and closed back above support at 1.15, as shown on the chart below...it's the one to watch for continued leadership in further advancement of oil prices over the next days/weeks since it has broken above major resistance, and since WTI has run into minor resistance.

The Daily comparison chart of Brent Crude Oil to the S&P 500 Index below shows that Brent has run into a major resistance level. If the S&P continues to rise, it will be interesting to see if buying slows in Brent, or if it continues to rise, as well...if so, at what pace.

The Daily comparison chart of WTI Oil to the S&P 500 Index below shows that WTI is nearing a major resistance level. As above, if the S&P continues to rise, it will be interesting to see if buying slows in WTI, or if it continues to rise, as well...if so, at what pace.

The last graph below shows the widening spread between the S&P 500 Index and the 10-Year T-Note yield...the spread has been ever-widening and has reached an all-time high (since January 1999). Normally these move in tandem but started diverging in 2010...one of these will have to reverse at some point.

Next week (Wednesday) will see the release of the latest Beige Book data...also, on Wednesday, Ben Bernanke will be delivering the FOMC's semi-annual report to the House Financial Services Committee. As volatility approaches major support, as the spread continues to widen between the S&P 500 and the 10-Year T-Note yield, and with the Dow 30 pressing up against 13000 (but unable to close above), the S&P 500 approaching its 2011 high of 1370.58, the spike in Oil, and a month-end close mid-week, it should be an interesting (and possibly volatile) week.

Enjoy your weekend!