Market status

The week ending August 5 was quite eventful, especially in the stock market. But let's go in order and start with the US dollar.

After breaking out of the triangle, to the downside, in mid-July, UUP touched its support at 21 and then started to creep back up to the lower edge of the triangle, which is now its resistance line. On the short-term, MACD and Stochastics indicate some possible upside bias, but the long-term trend is down, and the intermediate is somewhat sideways.

GLD is now above 161, and seems destined to go even higher.  It is almost 6% above its 50-day MA, and Stochastics indicates that it may be due for a minor pullback, which would represent a buying opportunity.

USO touched a low of 33 last week, but then closed at 33.95. The trend is down, and it may be ready for a bounce, given how oversold it is. The 52-weeks low, made in August 2010, was 31.50, and that may very well be the target of this leg down.

DBC is at 28.82, and seems in the process of making its own head and shoulder top, which would be confirmed with a solid drop below 28. The trend is down.  After 28, the next stop is the 25 to 26 level, which saw some back-and-forth action in Fall 2010.

$TNX is now at 25.58 and saw an 8.81% drop last week.  Ouch. Although the internediate trend is down, there is some visible support at the 24 level, last seen in October 2010. I would venture a guess that it would form a bottom in the next couple of weeks, but I don't feel strongly about it, and I would only recommend to sit and watch the action. The action in TBT and UBT, especially MACD-H and RSI(10), are suggestive of an imminent bounce.

Municipal bonds (TFI) are off to new highs at 23.12, and enjoying an uptrend. They rallied 1.56% last week while the stock market got hammered.

SPY dropped 7.15% last week, and is now at 120.08, after touching an intraday low of 116.86 in Friday August 5. DIA dropped 5.68%, while IWM dropped 10.55%, so blue chip are holding out better, and small caps are leading the way down.

In general, the stock market seems to have completed a head and shoulder top. In the case of SPY, the height of the formation is 11 points (136-125), the neckline break is at 127, so the minimum target is now 127 - 11 = 116. Which is close to yesterday's intra-day low. So now the question is are we done with this drop or is there more to go? My general feeling is that we're not done yet, the bottom will be found in a week or two, maybe after a bounce, or two. Keeping an eye on MACD and Stochastics should be useful for identifying overbought levels. Hourly charts are probably indicated while the market is moving so fast.