Morning Market

The year end consolidation of all the markets continues.  Notice how none of the major averages is breaking out in any meaningful way.  All the EMAs are in a tight bunch and the MACDs are giving lack-luster signals.  Until we see a move above or below any of the trend lines, the markets are in "consolidation mode."  Also -- there are no strong indicators for a move in either direction on any of the charts.

The Treasury market rallied last week in reacting to the EU situation, but remember that yields are already incredibly low, especially in relation to inflation; there is little reason to think we'll see a very strong rally above these levels that has any staying power (while the last CPI report was tame, consider this in relation to still high YOY numbers).

After consolidating last week, oil dropped sharply on Wednesday and continued its decline throughout the week, eventually resting near the 200 day EMA.  The EU situation has lowered possible future oil demand.  Additionally, the strong dollar is lowering the price of all commodities.

The dollar has clearly broken through upside resistance, and is now moving lower as traders take profits.  Look for the dollar to establish support at either the trend line of the shorter EMAs.  Notice the EMAs are now in a very bullish posture -- all are rising, the shorter are above the longer and prices are above all.  Also note the strength of the candle that pushed through resistance and the weakness of the candles on the sell-off.