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Thursday, October 1, 2015

Daily update 10/1 Dollar index

That was a mixed up day.

While SPX closed positive the breadth actually came in slightly negative.  Still not a convincing pattern.  If it can get up to the 20 SMA it would probably make a good short.  No law that says it has to get there though.

The futures closed higher in the night confirming the green bars from yesterday.  That gives us a micro uptrend, but we never tested the overnight high during market hours.  While they are above the 18 SMA there is no higher close confirming a break.  This still looks pretty fragile.  We will have to see if the bulls can rally the troops.

The green/red bar chart actually worsened a bit today.  No conviction here either. 

The bears came out selling right after the open.  Mid day the bulls came in and did some buying.  We have a very polarized marketplace.  Some believe we are making a major bottom and some believe we are entering a bear market.  To date the sellers have been more anxious then the buyers.  The path higher does not appear easy.  Clearly the bulls are not jumping over each other to buy.   Overnight news probably dictates whether we go higher from here or not.  It seems highly likely at some point we will roll over and test the Aug. low for real.  It is just a question of when and where from.

I have not commented on the dollar in a while.  I occasionally see people calling for a dollar top and another big move down.  Lets see what the monthly chart has to say.

It is clearly in a primary uptrend.  The last several months look more like a consolidation then a top don't they.  The lowest monthly close was the first month after the top.  While that bar closed below the last upthrust bar the buyers came rushing in.  The Aug. low made a new low for the correction and out came the bears to tell us the dollar was doomed.  Funny thing happened though.  The buyers stepped in once again.  The last five bars closed above the last upthrust bar low.  Is that really bearish?  Lets zoom in to the weekly chart.

This looks like a classic double bottom base forming.  If this is making a top I would still expect it to test the high before collapsing.  Also notice how much higher the dollar is then Q3 2014.  The earnings drag will be quite significant.  Even Q4 looks pretty tough.  Unless price drops it will be Q2 2016 before the year over year comparisons get favorable.  Of course that assumes we are not higher by then which is not a safe assumption in my book.  Are Q3 earnings really going to be good enough to excite buyers?


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