Action Galore at the 50 Day Moving Averages

What an interesting technical picture we see unfolding in the financial markets this week. The Dollar index has come up to its falling 50 day SMA line. The Aussie and Canadian dollars, along with most of the major equity indexes (which are correcting as we anticipated), have come back to the vicinity of – in some cases just below – their rising 50 day lines. Yen and euro have broken down through their 50s, as has the 10 year Treasury note price. Municipal bonds continue to get hammered, while the corporate index has joined in the fixed income rout. Commodities have sold off along with equities

What to make of this? Volume on the equity selloff has been a little heavier than I would like in the NDX and Dow, but the SPX and RUT don’t look so bad. Curiously, the Dow transports have been acting a little better than the industrials for a while now. This feels to me like another episode of the financial system jitters. Stocks, bonds and commodities trading in the same direction isn’t going to last long. Let’s see if we bounce off those 50 day MAs. That has been my target for adding new equity longs, but if they don’t hold, we’ll have to review.

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