Although the bulls were barely able to push the Dow Transport Index (DTX) back above support, they didn't have enough steam to keep the other major averages from closing in the red. In fact, the topping tails in the charts of the other major averages indicate that buying pressure has dried up for the time being. The end-of-day rise in the Trin and the VIX combined with a big increase in the negative VWAPS are all signs that the bears are stepping in. Don't be surprised if tomorrow's open is a gap to the downside.
In commodities, oil has been picking up steam but the momentum may be on the verge of stalling as weakness was seen today in the oil servicers and producers (XES, XOP). Both gold and silver have been on the verge of breaking above resistance but that, too, may have to wait as both the metal etfs (GLD, IAU, SLV) as well as the miner etfs (GDX, GDXJ) all reversed to the downside. I've been burned by gold before and I'd be extra cautious about jumping in until I see a clear sign of conviction (in either direction), and so far, we don't have one.
In the soft commodity space, the Cotton etf (BAL) has been rising from a four and a half year bottom that it put in mid-January. Today, it broke above near-term resistance at $45. The next test for the stock will be at major resistance at $46, and should it manage to clear that, it could be ontrack to retest its next major resistance level at $60.
Going global, China continues to soar. Among individual issues trading on US exchanges, the following have been in bullish trends and are at new highs: AIA Group (AAIGF, $6.55), China Southern Air (ZNH, $43.13), Industrial & Commercial Bank of China (IDCBY, $15.45), and micro-cap Bank of China (BACHF, $0.62). China Southern Air (ZNH) has risen very far very fast so I would urge caution in entering the long side of this trade (take a smaller position and use tighter stops).
On the M&A rumor mill: Twitter (TWTR, $52.87) has been trending up for the past two months. Today it rallied 4% on twice normal volume on rising rumors that it's on the short list of take-over candidates (although at a $40B valuation it's going to take someone with very deep pockets to pick up this puppy). Google, anyone?
