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Tuesday, November 24, 2015

Daily update 11/14 Dollar

Resistance held another day.

SPX tested below the 20 SMA, but rebounded sharply.  After being -64% mid morning breadth rebounded to +58% at the end of the day.  Both new highs and lows dropped to 61 and 67.  The new lows dropped because oil and oil stocks were up on the news of Turkey shooting down a Russian fighter jet.  Energy has contained a lot of the stocks that have been making new lows recently.  Still no resolution on the resistance.

The futures bumped the red resistance line twice this afternoon and sold off.  Resistance was clearly still there today.  Now that the 20 SMA has caught up to price it would be easier for the futures to roll over now.  That means the bulls need to get it going soon or risk making another lower high.

Despite the rebound from the gap down the green count dropped slightly.  Obviously that would not be good for bulls if that happens again tomorrow.  It would not take much to get another negative crossover. 

The days before and after Thanksgiving are traditionally somewhat bullish.  Maybe the bulls will try to take advantage of potential sellers being away to get through resistance.  If that happens we will have to see if SPX is able to stay up there when everybody gets back next week.

The dollar index is now approaching the highs from the spring.  It actually touched that lower red line yesterday.  The prior resistance area should now be support.  This looks like a nice basing structure to me, but there sure are a lot of people expecting this to be a top.  I even saw a research report the other day that shows the dollar usually starts down once rates start to go up.  It would be normal to pause here at resistance or even pullback to test that prior resistance as support.  Before I could think about this as a top I will want to see the index get back below that lower green line.  The rally into this trading range was so strong the index never even pulled back enough to touch its 50 SMA.  I think it is unlikely to rally that strongly then form a top and roll back over.  I expect another leg higher eventually.  That probably won't sit well with stocks.  This is an important level so it might take some time to decide what to do here.


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