No It Cannot Be Another 'Deja-vu' for Wall Street

A day after Dow Jones posted triple digits gains the market came out flat last night and ain't this sounds familiar? Last two weeks the index formed a long white candle then it was followed by series of small doji candlestick patterns before the market went south. No, it cannot be another 'deja-vu' for Wall Street and here are the reasons why:



10years USD Treasury Bonds
Broke-out from Downward Resistance


In case you failed to notice yields spike-up in the Bond Market for the last four days, it broke-out from its' small symmetrical triangle pattern and simultaneously broke above its' downward resistance.







We didn't have similar spike-up of bond yields two weeks ago; bond market can be a leading indicator for the stock market (refer to my Weekly Cross Markets date April 13).


VIX INDEX
(Gap) Down and Broke Below Support Trend Line


Two weeks ago, when Dow Jones formed its' first doji candlestick pattern after the long white candle, volatility index bounced back and formed a small white candle and it was well above its' 200days moving averages.







We have an entirely different volatility reaction now, when S&P500 index formed a long white candle the other day, volatility index gap down significantly and broke below its' major support trend line and it is well below its' 200days moving averages; moreover, volatility reading had a lower high and lower low and closed below yesterday's close last night after S&P500 index formed a small doji candlestick pattern.


US DOLLAR INDEX
Relatively Stable Ahead of FED Meeting








The greenback was tremendously under pressure and on a downward slide 3 weeks before the much anticipated FED rate cut last March 18; on the contrary, US Dollar is relatively stable 2 weeks ahead of another expected FED rate cut comes the end of the month.


CRB INDEX
Somewhat Exhausted







The resiliency and unpredictability in the US Dollar has kept investors away from the commodity market; light crude oil and coal though trading at life time high are technically on extreme over-bought levels and spot gold though staging a rally appears easing.




S&P500 INDEX
No Deja-vu




The spike in the 'put option' for citibank ahead of its' earnings report sent shivers to Asian markets as of this writing and S&P500 Index may or may not shrug this expected negative earnings and potential additional write-downs from citibank tonight; but technically, I have every reason to believe that there will be no deja-vu for Wall Street as enumerated above.








The Index should break above its' major support turned resistance trend line in the coming days though there may be some dips along the way but no significant lower lows.