Daily Form November 10, 2009

Inter-market Technical Analysis using algorithmic pattern detection

TUESDAY NOVEMBER 10, 2009       05:19 ET

The DJIA closed at a 13 month high but the volume across the US equities spectrum was on the light side. Other indices still have to show that they can take out the mid October highs.
The Nikkei 225 continues to struggle with a gravestone doji candlestick being registered in today’s session as the index failed to break back above the 10,000 level.

The small cap stocks, via the IWM proxy for the Russell 2000, moved in line with the broader larger cap market registering a gain just above two percent. The index still has some distance to make up before it can challenge the most recent highs but the volume over the last three sessions has been remarkably light.

My comments yesterday regarding sterling turned out to be timely as the UK currency fell back abruptly against both the euro and the US dollar. The announcement from Fitch that the UK is the most likely economy to lose its AAA rating has caused the pound to slump in trading on Tuesday and I would expect the EUR/GBP rate to challenge the level indicated on the chart around .9070 in the near term.

USD/CHF will be worth monitoring over the next few hours as the volatility bands have constricted to a very tight range as the US dollar approaches parity with the Swiss currency and there are some momentum divergences. The fact that many equity indices are at key levels and that certain currency cross rates are now coiling could be the precursor to a volatile North American session.