A rally in the dollar shook things up today. Financials led the indices higher while (dollar-denominated) commodities got sold pretty hard. Here’s a chart of the dollar showing something that resembles an Adam & Eve Bottom:
The dollar has a lot of work to do to get that chart looking healthy. A good sign would be for its 50-day moving average to be above its 200-day moving average and for the dollar to be above them both. There’s a lot of room for what could be viewed as just a normal retracement and potential for a short squeeze so I’ll be keeping a close eye on the dollar (and commodities).
Gold, as it often does, traded opposite the dollar today and is following through on that bearish setup I’ve been pointing out for a few weeks. Back in March I pointed out the forming double-top in the PowerShares Agriculture ETF, DBA (composed of Corn, Wheat, Soybeans and Sugar). It’s pretty much been trading in lockstep with gold since then.
The Nasdaq managed to close above its February high today. It’s not the most convincing move above resistance I’ve ever seen but the bulls will no doubt take it. And here’s something we haven’t seem much in the last 5 months — the 50-day moving average is actually headed higher.
The S&P is still toying with that 1400 level.
|Trend||Nasdaq||S&P 500||Russell 2000|
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I’m simply using the indices’ relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
Post from: Trader Mike's Blog