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Stocks Rally, Gold Drops, Bonds Soar, Something Has To Give



July 19, 2011 – Comments (0) | RELATED TICKERS: ZSL , WYNN , TLT

The major stock indexes are surging higher this afternoon. The NASDAQ composite is leading the charge as the tech heavy index is trading higher by 2.17 percent. The strange thing about today is that everything is rallying higher. Bonds are soaring higher with the major stock indexes. Even the U.S. Dollar Index has rallied higher off of the morning lows.

The popular iShares Barclays 20 + Year Treasury ETF is trading higher by $1.54 to $96.80 a share. Rarely, will the bond market and the stock market trade sharply higher together.

Gold and silver are also declining sharply lower this afternoon. The SPDR Gold Shares(NYSE:GLD) is trading lower by $2.15 to $154.42 a share. The iShares Silver Trust(NYSE:SLV) is declining lower by $1.40 to $38.05. Gold and silver were both slightly extended and overbought on the daily chart.

The U.S. Dollar Index futures(DX U1) has also rocketed off of the morning lows. Around 10:10 am EST the U.S. Dollar Index futures were trading as low as $75.18 per contract. Since that morning low, the U.S. Dollar Index futures have rallied higher by 0.40 cents to $75.60 per contract. Normally, when the U.S. Dollar Index rallies higher the major stock indexes will deflate and decline lower. That is not the case this afternoon as everything is rallying higher.

There are a few leading stocks that are failing to participate in today's large stock rally. Wynn Resorts Ltd.(NASDAQ:WYNN) is a leading stock that reversed lower after a sharp gap higher open. This stock is making a sharp outside day pattern on the daily chart. Traders must use caution when trying to buy this stock now, the current pattern usually indicates further downside.

Sina Corp.(NASDAQ:SINA) is a leading Chinese internet stock that is also making a reversal on the daily chart. SINA stock is trading lower by $1.34 to $119.66 a share. Traders should watch for more of a pullback in this stock before committing to buying this stock. Stocks that fail to rally higher on strong trading days are often warning traders that they may need to pullback and consolidate before trading higher again.

Nicholas Santiago

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