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Overview
The S&P 500, SPX, is up +0.58% for the week, up +5.62% for the month, up +4.62% for the year, and up +72.44% since the March 9, 2009 market bottom. The US Dollar, USDX, is up +1.05% for the week, up +1.13% for the month, up +4.68% for the year, and down -8.49% since the March 9, 2009 top.
SPX closed Friday at 1166.59, after setting another 2010 YTD closing high of 1174.17 on Tuesday, March 23. Likewise, the US Dollar pulled back on Friday to a close of 81.60, from a 2010 YTD closing high on Thursday of 82.16.
The Big Question: What happens now? Up, Down, Sideways? An upside breakout has occurred above 1150 for the SPX, previously resistance but which is now important recent support. This 1150 support could be tested again, with the strengthing of the US Dollar. As long as SPX stays at or above 1150, this is a very bullish indicator. Any new 2010 YTD highs need the US Dollar to stop ascending, at least trade sideways, and preferably pullback some. The USD has rallied against the key currencies EUR, JPY, and GBP. When the Greece sovereign debt crisis is settled to the satisfaction of the markets, then I believe the top is in at least intermediate-term for USD and the SPX continues upwards.
All 5 major indexes (Russell 2000, NASDAQ Composite, NASDAQ 1000, S&P 500, and Dow Jones Industrial Average 30) have traded the same this week. All set 2010 YTD closing highs and then pulled back. The S&P 500 is now in an intermediate-term bull market, as is the US Dollar Index. Both the S&P 500 and US Dollar Index are technically in long-term bull markets simultaneously. For comparative purposes, the current intermediate-term and long-term signals and the date generated are:
All 5 major indexes (Russell 2000, NASDAQ Composite, NASDAQ 1000, S&P 500, and Dow Jones Industrial Average 30) have traded the same this week. All set 2010 YTD closing highs and then pulled back. The S&P 500 is now in an intermediate-term bull market, as is the US Dollar Index. Both the S&P 500 and US Dollar Index are technically in long-term bull markets simultaneously. For comparative purposes, the current intermediate-term and long-term signals and the date generated are:
S&P 500 Bull 3-16-10, Bull July 2009
US Dollar Bull 12-21-09, Bull January 2010
Russell 2000 Bull 3-11-10, Bull July 2009
NASDAQ Composite Bull 3-15-10, Bull May 2009
NASDAQ 100 Bull 3-15-10, Bull April 2009
Dow Jones Industrial Average Bull 3-16-10, Bull July 2009
S&P 500: Intermediate-Term Bull Market Continues
S&P 500 Daily Chart Below is the SPX daily chart for 2010.
Noteworthy Closing Prices on daily chart below:
Current Close 1166.59 (Highest yellow horizontal line)
2010 YTD High 3-23-10 1174.17
Previous 2010 High 1150.23 1-19-10 (Second highest yellow horizontal line)
YE 12-31-09 1115.10 (Third highest yellow horizontal line)
10 Month EMA 1071.07 (Lowest yellow horizontal line)
Intermediate-Term Trend The intermediate-term signal, the comparison of the 25 day and 50 day simple moving averages, signalled a bull market for the SPX on Tuesday, March 16. That is, the 25d sma is greater than the 50d sma. An intermediate-term bear market had been in effect since February 10, only the third such bear market signal occurring since the March 9, 2009 bottom.
Resistance The current close, the highest yellow horizontal line, is below the recent 2010 YTD closing high, which is now recent resistance. All other recent resistance has been overcome, notably the 1150 area, and have become multiple levels of support below. SPX is also trading in the September 2008 area, but nothing appears of consequence for resistance or support.
Support There are multiple levels of support below, being that the SPX is near the YTD highs and also highs since the March 9, 2009 market bottom. Notable support is the previous YTD high of 1150.23 on 1-19-10 and the related struggle to breakout upside from the 1150 area from about March 10-16.
Moving Averages SPX is now well above the 25d, 50d, 100d, and 200d simple moving averages. The 25d sma bottomed on February 26 and is now ascending. The 50d, 100d, and 200d sma's are all ascending,.The 25d sma has regained the 100d and then the 50d sma's.
Uptrend Line The uptrend line, a measure of the rate of price ascent, is from the March 9, 2009 closing low of 676.53 up through the February 8, 2010 closing low of 1056.74. The February 8 closing low has been the bottom of the 2010 pullback. The SPX has remained above this trendline since bouncing up above on February 9.
Downtrend Line The downtrend line, a measure of the rate of price descent, is from the October 9, 2007 all-time closing high of 1565.15 down through the March 23, 2010 YTD closing high of 1174.17. SPX has remained below for 3 days now.
RSI 14 day = 74.18 is overbought; has dropped from mid to high 90s of mid March
RSI 28 day = 76.39 is overbought; has dropped from 83.30 YTD high of March 23
I originally thought, even with the higher RSIs, that a pullback and/or consolidation was not imminent, because the US Dollar would not strengthen significantly. However, until the Greece sovereign debt issue is resolved once and for all, I now think we could see some additional SPX consolidation and some pullback as the US Dollar maintains strength.
MACD (12,26,9) The MACD is bullish and has been since February 16. However, the MACD has been decreasing.
Long-Term Trend The lowest horizontal yellow line is the 10 month exponential moving average from the monthly chart, which I have overlayed on this daily chart. That is the line in the sand, so to speak, for the long term signal of a bear market. The SPX is well above this signal at the current close, which is the highest yellow horizontal line.
Conclusion The SPX has rallied from lows of February, set a new 2010 YTD closing high on Tuesday, and now has pulled back some due to a strengthening of the US Dollar. SPX is at some weak recent support, stronger support is in the 1150 area below. The RSIs indicate SPX is overbought, so a major upside breakout is questionable and can only be fueled by a weakening US Dollar. Therefore, until the Greek soverign debt crisis is resolved, or at least the chatter volume decreases, I don't foresee a significant upside for the SPX. I would expect more consolidation, sideways trading, and a trading range established for the interim. The 1150 area is critical support and the bottom for the SPX at this point. 1150 could be tested again. The intermediate-term trend is bullish and the long-term trend is still bullish.
US Dollar: Intermediate-Term Bull Market Continues
US Daily Chart Below is the USD daily chart from late November, 2009 through the current close.
Noteworthy Closing Prices on daily chart below:
Current Close 81.60 (Highest yellow horizontal line)
2010 YTD High 3-25-10 82.16
Previous 2010 YTD High 2-23-10 80.93 (Second highest yellow horizontal line)
YE 12-31-09 77.95 (Lowest yellow horizontal line)
10 Month EMA 79.46 (Third highest yellow horizontal line)
Intermediate-Term Trend The intermediate-term signal, the comparison of the 25 day and 50 day simple moving averages, indicates an ongoing bull market for the US Dollar. That is, the 25d sma is greater than the 50d sma and has been since December 21, 2009. This is the first such bull market signal since from early February 2009 through early April 2009. This is also the first bull market since the March 9, 2009 closing high and subsequent decline into a bear market.
Resistance The current close, the highest yellow horizontal line, is below the recent 2010 YTD closing high, which is now recent resistance. All other recent resistance has been overcome. USD is also trading in the May 2009 price area, but nothing appears of consequence for resistance or support.
Support There are multiple levels of support below, being that the USD is near the YTD highs. Notable support is the previous YTD high of 80.93 on 2-23-10. A tremendous amount of recent support is the range trading from February 4 though March 23.
Moving Averages The USD tested the 25d sma but has spiked above. With this large green candle of March 24, the USD is easily above the 25d, 50d, 100d, and 200d sma's. The 25d, 50d, and 100d sma's are ascending and the 200d sma has leveled off. The 50d sma now has crossed above the 200d sma, the Golden Cross, on February 18. The 100d sma met the 200d sma on Friday, March 26 and both are equal at 78.09.
Uptrend Line The uptrend line, a rate of price ascent, is from the November 25. 2009 closing low of 74.24 up through the March 16, 2010 closing low of 79.70. The November 25 low has been the bottom, since the March 9, 2009 peak. The March 16 low has been the bottom of the 2010 pullback. The USD tested this uptrend line and bounced above on March 18. The USD has stayed above subsequently.
Downtrend Line The downtrend line, a rate of price descent, is from the March 9, 2009 high of 89.17 down through the March 25, 2010 YTD closing high of 82.16. USD pulled back from the YTD high the next day, Friday.
Downtrend Line Very Long-Term A very long-term, well known downtrend line, not shown on this chart, from the January 2002 close of 120.22 down through the March 9, 2009 close of 89.17. USD is still well below - the trendline is at approximately 84.50.
RSI 14 day = 61.17 is reasonable, neutral; up from the mid 30s of mid March
RSI 28 day = 62.22 is reasonable, neutral; up from the high 40s of mid March
The recent upward bounce has increased the RSIs to reasonable levels, from the previous oversold levels.
MACD (12,26,9) The MACD is now bullish, since Wednesday, March 24.
Long-Term Trend The third highest yellow horizontal line is the 10 month exponential moving average from the monthly chart, which I have overlayed on this daily chart. That is the line in the sand, so to speak, for the long term signal of a bear market. The USD is above this signal at the current close, which is the highest yellow horizontal line.
Conclusion The US Dollar has had a remarkable, rather unexpected, rally from the lows of late November and early December 2009. The rally stalled around February 19-23, sideways trading ensued, then a pullback. The USD then showed some strength last week before exploding upwards on Wednesday with a big green candle. The RSIs are neutral, after bouncing off lows indicating an oversold condition. The USD has regained and exceeded the benchmark 80.00 price, which had been the center of price trading for over a week. I had questioned how much upside momentum was left unless Greece totally melts down as a result of squabbles in the EU. I expected more sideways trading to occur, a trading range established, and no definitive up or down move. Until the Greece sovereign debt crisis is solved once and for all, apparently the USD has more upside momentum. The intermediate-term trend is still bullish. The long-term trend is still bullish. See additional comments below in the Summary.
Summary
Both the SPX and US Dollar appear bullish and both have continued upwards! There is some uncertainty in the markets, but no fear. The USD rallied Wednesday and Thursday big time against the EUR and JPY, causing the big spike. This put a cap on the SPX rally. USD is in both intermediate-term and long-term bull markets versus the EUR, JPY, and GBP, which comprise 83.1% of the US Dollar Index.
EUR/USD The EUR/USD signals are both intermediate-term and long-term bear markets, but a bottoming process and sideways trading began February 18, until the EUR brokedown through on Wednesday. The EUR has also broke down through the 25d sma on March 19 and is now below the 25d, 50d, 100d, and 200d sma's. The EUR had been in a trading range between February 4 and March 23 before this breakdown. RSI 14d is oversold at 37.26 and RSI 28d is leaning oversold at 46.58. MACD has been bearish since March 21. The EUR has broke down through support, is a new bottom in?
USD/JPY The USD/JPY signalled an intermediate-term bull market on Friday, March 26 and is also now signalling a long-term bull market signa. The USD is now approaching the 2010 YTD closing high of 93.1610 on January 7. USD is above the 25d, 50d, and 100d sma's and the 25d sma crossed above the 50d sma on Friday, March 26. The RSI 14d is overbought at 77.60, but the RSI 28d is reasonable, neutral at 62.33. MACD has been bullish since March 7.
UUP ETF (US Dollar Index Bullish Fund) The UUP signals are both an intermediate-term and long-term bulls markets, reflecting the overall trend of the USD reviewed above.
UDN ETF (US Dollar Index Bearish Fund) The UDN signals are both an intermediate-term and long-term bear markets, reflecting the overall trend of the USD reviewed above.
US Dollar Index is comprised of 6 currencies, which are weighted. The current intermediate-term and long-term signals, the USD trend versus that currency, are noted, after the weighting percentage, below:
EURO 57.6% Bullish, Bullish; USD has rallied
JPY 13.6% Bullish, Bullish; USD has rallied
GBP 11.9% Bullish, Bullish; USD has rallied
CAD 9.1% Bearish, Bearish; USD has rallied
SEK 4.2% Bearish, Bearish; USD has rallied
CHF 3.6% Bearish, Bullish, USD has rallied and consolidating
The Euro, JPY, and GBP are weighted a total of 83.1% of the US Dollar Index. Therefore, the USD trends versus Euro, JPY, and GBP are what had been driving the USD bull market. However, all 3 currencies, have recently rallied resulting in the USD generally pulling back and trading sideways.
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Previous & Additional Comments
The Russell 2000 regained and exceed it's 2010 high first, followed by the NASDAQ Composite, and then the NASDAQ 100. Next the SPX set 2010 YTD highs in excess of the Janaury 2010 highs. The Dow Jones Industrial Average was lagging behind the SPX and other aforementioned indexes, a familiar pattern during this rally from the March 9, 2009 low as the NASDAQ 100, NASDAQ Composite, and/or Russell 2000 have led the rally with the S&P 500 following and then the Dow Jones Industrial Average lagging in the back. Now the DJIA has reached a new 2010 YTD high on Wednesday, March 17, and has been able to hold the price. I so noted this in a previous post.
As I have stated in previous posts, there is some uncertainty, but not fear, in the markets. As of now, the official unemployment rate peaked in October 2009, but the official underemployment rate, U-6, has increased recently. This Great Recession, as with all recessions, results in a certain amount of restructuriing of the economy, which is in progress. At present, I am not bearish on USA equities but cautious after this good bull run since February 9 on the SPX
I do not foresee a double dip recession or another significant economic downturn. The withdrawal of significant federal economic stimulus will result in a flattening of the rebound and perhaps a small pullback. I do see a long, slow recovery as the economy restructures to the new economic paradigm. The January and February USA economic data has not been that bad, actually encouraging, even considering snow storms! lol I expected worse numbers, especially after reasonably good November and December 2009 holiday data.
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