I wanted to point out that the dollar index is very close to an old support point from October of last year.
Because the SPY declared and paid a dividend on Friday, we will use DIA. You can clearly see the near vertical move on the 17th and the sell off that followed it. Today we tested that top twice and failed.
I showed above how the dollar is at a long term support. Here I want to show the massive buying that came into the market, more than doubling the average volume of the past week. This becomes very significant when we remember that the S&P has close to a 100% negative correlation with the dollar.
In the 15 minute after hours on Friday, the S&P fell to the low of the day on heavy liquidation. This sets up the possibility that Friday was an attempt to rally that failed due to exhausted or lacking demand. Supporting this possibility is the sharp drop in volume and the double top on the intraday point and figure. Even if that were not the case, the three days of virtually unchanged closes point to supply at least checking and perhaps overcoming demand, and that is bearish enough given the action of the dollar. f
I want to begin with an observation. Today the market turned twice after the opening. The first time was on a Spring at noon and the second time was the upthrust to 98.46. I do not remember springs and upthrusts working this well in a while and it indicates to me that possibly the controlling forces in this market have either changed their intent or a new control is emerging. It is not behaving the same way. The high at 98.46 was an upthrust of the previous high that ended and incredibly weak rally. Contrast that with the sell-off that began at 3:25 and closed in the after hours in approximately the red circle. All the closes were at or near the low, ranges were wide and the volume was decent. If Friday were not options expiration we would conclude that after the rally attempt failed supply kicked in to the close and perhaps the trend is changing or beginning to change as supply has clearly been stronger than demand for a few days now.
I want to begin with an observation. Today the market turned twice after the opening. The first time was on a Spring at noon and the second time was the upthrust to 98.46. I do not remember springs and upthrusts working this well in a while and it indicates to me that possibly the controlling forces in this market have either changed their intent or a new control is emerging. It is not behaving the same way. The high at 98.46 was an upthrust of the previous high that ended and incredibly weak rally. Contrast that with the sell-off that began at 3:25 and closed in the after hours in approximately the red circle. All the closes were at or near the low, ranges were wide and the volume was decent. If Friday were not options expiration we would conclude that after the rally attempt failed supply kicked in to the close and perhaps the trend is changing or beginning to change as supply has clearly been stronger than demand for a few days now.
