Friday, August 08, 2008

Consolidation trading once more... Treasuries

Large caps look set to finish the week inside their recent consolidations. The S&P and Dow both have well formed pennants which - if they were to follow trend - will break down.

Only tech averages look on course to maintain this week's breakouts. Nasdaq below

The global economic slowdown with falling commodity prices strongly suggests inflation is no longer a problem; so interest rate hikes are unlikely. The 10-year yield is marking an important test of 5-month support and the 200-day MA; assumptions point to a bounce, but my hunch says lower from here.

Remember - price action always trumps opinion (no matter where you read it)

**Correction ** Removed my gold comments because ehhh.... I referred to a 2006 chart. Slap on wrist. Nobody noticed (probably not a good thing!)

Dr. Declan Fallon, Senior Market Technician, the free stock alerts, market alerts and stock charts website