5 April 2016 – Market taking a breather

The market further consolidated as it takes a breather from the previous week’s big move. An increase in volatility that we warned about is to be expected as we enter earnings season with Alcoa reporting next week. The Japanese market is to be watched closely as the BoJ is at panic station. We could see further market moving announcement as the Japanese government tries to devalue the Yen.

Dow Transportation gapped down below its 200 SMA and rallied in the first hour. It swung wildly in a range trading day and closed with a spinning top doji candle below its 200 SMA. Pivot momentum remains downward. Daily volumetric buying pressure is at 79.1%.

Dow Industrial had a small gap down on market open. It range traded throughout the day and closed with a small bearish Marubozu candle. Pivot momentum has reversed downward. Short term volumetric buying pressure is at 84.6%.

Russell 2000 had a small gap down on market open and swung its way downward. It closed with a bearish Marubozu candle above its 21 EMA. Pivot momentum has reversed downward. Volumetric buying pressure is at 76.9%.

Nasdaq 100 had a big gap down on market open and range traded throughout the day. It closed with a small spinning top doji candle. Pivot momentum has reversed downward. Volumetric buying pressure is at 88.4%. The Nasdaq 100 is in a monthly Squeeze.

S&P 500 gapped down on market open and spent the rest of the day range trading. It closed with a bearish Marubozu candle. Pivot momentum remained downward. Volumetric buying pressure is at 87.6%. The S&P 500 is in a monthly Squeeze.

Commodities
Oil (/CL) futures gained is trading at $36.75 per barrel. Gold (/GC) futures is trading at 1231.6 an ounce. Silver (/SI) futures is at 15.120. Commodities (DBC) ETF closed at 12.85.

Bonds
Junk bonds ETF (HYG) is at 80.86 in a sideway market. Bonds ETF (TLT) is up at 132.19 and has exited its Squeeze.

Currencies
USD/JPY traded down to 110.36 and has exited its Squeeze. This a new one year low. The dollar index (/DX) is at 94.670 in a sideway doji action. EUR/USD is at 1.1378 in a sideway action.

Relative Strength – Sectors
On a month lookback period, the ETFs outperforming the S&P 500 are XLK, XLV and XLY respectively. The technology sector continues to show strength.

On a quarterly lookback period, the relative strength order are XLB, XLE, XLI, XLK, XLY, XLU and XLF respectively.

Market Internals
Vix closed at 15.42. Skew is down at 120.27. Market sentiment remains bullish. Market breadth has flattened. Volumetric accumulation/distribution has flattened.

The Week Ahead
We are seeing the market consolidating after big moves up the previous week. The market is working off its overbought conditions and the sideway action can be expected before any further moves cand be happen. Also it is hitting major long term resistance which will increase the volatility. The prognosis is to expect further volatility this week.

To YOUR wealth!