Home > Uncategorized > Brief Update: 2010/01/12: NOT a Zero Sum Game: Govvies Firm Into Supply Even As Equities Extended Their Rally Yesterday

Brief Update: 2010/01/12: NOT a Zero Sum Game: Govvies Firm Into Supply Even As Equities Extended Their Rally Yesterday

▪ Just as we noted yesterday, the equities strength above resistance levels was that much more impressive for having occurred into the face of significantly weak economic data. That they put on a decisive late session rally on Friday in the wake of the very weak Consumer Credit number was a sign something else was afoot.   

And the near-term technical structure in the weak sister DJIA (albeit relatively a bit firmer of late) offers the clearest picture of whether the overall equities trend remains bullish.  The key to that will initially be whether there is any slippage as modest as a failure back below the 10,423 low hit on the selloff on the last day of 2009. 

That has become even more critical in the wake of the DJIA push through the 10,600 topping line resistance of its rare Flat-Bottomed Widening Formation (best seen on the daily bar chart, with the lows forming the ‘flat bottom’ on November-December pullbacks in the 10,230 area.)  Rather than just an interim level in a developing pattern, 10,423 is now the Tolerance of a bona fide UP Break; and failure (i.e. daily Close) back below that level could represent a sustainable trend reversal.

▪ The only other trend tendencies requiring further discussion at this time is likely the key resistances in the impressively (in the face of equities strength) buoyant govvies. While false swings above resistance are possible in bear markets, after holding support noted yesterday the March T-note need to Close above interim 116-20 resistance to possibly retest its violated 117-24/-16 support; with similar tendencies in other international govvies…

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