20 October 2016 – Indecision and volatility

The major indices were volatile with up and down swings and closed relatively unchanged.

WTI crude oil is still trading within the $50-$52 per barrel. Gold and Silver is still in its downtrend.

The dollar index gained and continued its uptrend and US Treasury bond futures (ZB) were little changed.

The European Central Bank (ECB) kept its three interest rates unchanged as expected and also maintained the size and duration of its asset-purchase program.

Dow Transportation traded down on market open and closed with a bearish marubozu candle on its 21 EMA. Momentum is upward. Volumetric buying pressure is at 0%. The index is in a daily and monthly Squeeze.

Dow Industrial traded upward on market open and was volatile throughout the day with wild swings up and down. It closed with a doji candle on its 21 EMA. Momentum remains downward. Short term volumetric buying pressure is at 57.6%. The index is in a daily and monthly Squeeze.

Russell 2000 traded up and down throughout the day and closed with a hammer candle below its 8 EMA. Momentum remains downward. Volumetric buying pressure is at 11.6%.

Nasdaq 100 swung wildly up and down throughout the day and closed with a high closing doji candle on its 21 EMA. Momentum is neutral. Volumetric buying pressure is at 100%. The index is in a daily and monthly Squeeze.

S&P 500 swung wildly up and down throughout the day and closed with a doji candle on its 8 EMA. Momentum is downward. Volumetric buying pressure is at 50.1%. The index is in a daily and monthly Squeeze.

Metals and Commodities  
WTI Crude oil futures traded down for the day and painted a bearish marubozu candle on its 8 EMA. It is trading at $50.65 per barrel. The uptrend continues.

Gold futures traded down and is trading at $1267.0 per ounce. It is sitting on its 200 SMA which has been providing support. Momentum is downward.

Silver futures is trading at $17.540 per ounce and below its moving averages in sideways trading.

Agriculture (DBA) ETF closed at 20.21 in sideways trading.

Commodities (DBC) ETF gapped down and closed at 15.27. The uptrend continues.

Bonds
Bond futures (ZB) traded sideways at 164’16. It is below its moving averages.

High Yield bond ETF (HYG) is Squeezing upward and closed at 87.35 above its moving averages. The uptrend continues.

Bonds ETF (TLT) gapped up and pulled back and closed on its 200 SMA at 133.11. Momentum remains downward.

Currencies
The dollar index painted a bullish candle and is at 98.280 and above its moving averages.

EUR/USD traded sharply downward in a volatile day and closed with a large bearish candle in a continuing downtrend. It is trading at 1.09291.

USD/JPY traded up for the day and is trading at 104.073. It remains in a sharp uptrend.

Relative Strength – Sectors
On a monthly lookback, the relative strength order of the ETFs that are outperforming the S&P 500 are XLE, XLF, XLB, XLU, XLV and XLK respectively.

On a 3-month lookback, the relative strength order of the ETFs that are outperforming the S&P 500 are XLE, XLK, XLF, XLB, XLU and XLV respectively.

Market Internals
Vix closed at 13.75. Vix futures is at 15.80 and is in a Squeeze. Skew is at 123.91. Market sentiment is bullish. Market breadth has flattened. Volumetric accumulation/distribution is sloping upward.

The Week Ahead
Market breadth is showing an intermediate term decline which is a forewarning of a potential correction. Volumetric accumulation and distribution is flat for the intermediate term.

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