The S&P 500, SPX, is up +0.67% for the week, up +5.72% for the month, up +4.72% for the year, and up +72.60% since the March 9, 2009 market bottom. The US Dollar, USDX, is up +1.42% for the week, up +1.50% for the month, up +5.07% for the year, and down -8.15% since the March 9, 2009 top.
The S&P 500, SPX, closed Wednesday at 1167.72, after setting another 2010 YTD closing high of 1174.17 set on Tuesday, March 23. The current close is just above support from the Wednesday, March 17 close of 1166.21. The Tuesday high is now considered recent resistance and a 2 day trading range has been established.
The Big Question: What happens now? Up, Down, Sideways? An upside breakout has occurred above 1150, 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. 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
Noteworthy Closing Prices on daily chart below:
Current Close 1167.72 (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 1071.28 (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 and Support The current close, the highest yellow horizontal line, is now 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 price area.
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, which is a postive sign. 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. I have reset the downtrend line to this new high and SPX remains below.
Relative Strength Index (RSI)
RSI 14 day = 81.44 is very overbought; but has dropped from mid to high 90s of last week
RSI 28 day = 78.73 is overbought; near 2010 YTD high of previous day 83.30
I originally thought, even with the higher RSIs, that a pullback and/or consolidation was not imminent, beecuase 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.
MACD (12,26,9) The MACD is bullish and has been since February 16.
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 RSI indicates 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
Noteworthy Closing Prices on daily chart below:
Current Close 81.90 (Highest yellow horizontal line)
2010 YTD High 81.90 3-24-10 (Highest yellow horizontal line)
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 79.51 (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 and Support The current close, the highest yellow horizontal line, has raised the price above all recent resistance - all the way back to May 2009 and even to January 2009 prices. There is considerable support below consisting of consolidation trading since February 4.
Moving Averages The USD tested the 25d sma but has spiked above. With this large green candle, 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 is close to crossing above the 200d sma.
Uptrend Line The uptrend line, a rate of price ascent, is from the November 25. 2009 closing low of 74.24 up through the January 14, 2010 closing low of 76.76. The November 25 low has been the bottom, since the March 9, 2009 peak. The USD tested this uptrend line and bounced above on Friday, March 19. Whether the USD can continue above this trendline, a rate of price ascent, will determine how strong this bull market is.
Downtrend Line The downtrend line, a rate of price descent, is from the March 9, 2009 high of 89.57 down through the February 23, 2010 closing high of 80.93, which was the 2010 YTD closing high for a time. The USD had struggled with this downtrend line since February 23, but was able to breakout above on Friday, March 19.
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, is still above the USD current price, at approximately 83.20. However, the USD is approaching this downtrend line and, quite frankly, I never thought the USD would rise this close to it.
Relative Strength Index (RSI)
RSI 14 day = 65.98 is reasonable, neutral; up from the mid 30s of mid March
RSI 28 day = 61.37 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, effective 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 expolding 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 question 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. I again do not see more upside momentum, but I was incorrect on this over the weekend. The intermediate-term trend is still bullish. The long-term trend is still bullish. See additional comments below in the 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 big time against the EUR and JPY, causing the big spike. This put a cap on the SPX rally.
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 brokedown through the 25d sma. The EUR is in a trading range between the February 10 closing high and the February 24 closing low. RSI 14d is oversold at 35 and MACD has been bearish since March 21. The EUR has brokedown further than I thought it would, sheesh.
USD/JPY The USD/JPY signals are both intermediate-term and long-term bear markets. However, the intermediate-term signal is essentially neutral and the long-term signal is being tested. The USD has bounced above the March 3, 2010 closing low of 88.4590 and is well above the November 29, 2009 closing low of 86.3530. The 25d, 50d, and 100d sma's have converged just above 90. The RSI 14d is slightly overbought at 76 and MACD has been bullish since March 7.
GBP/USD The GBP/USD signals are both intermediate-term and long-term bear markets. The GBP bounced up from the March 1, 2009 closing low of 1.49256 low but is now testing this bottom again. The RSI 14d is rather oversold at 49 and MACD has been bullish since March 11.
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% Bearish, Bearish; 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 bounced up from March 12 low
CHF 3.6% Bullish, Bullish, USD has rallied
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.