S&P Stuck In a Holding Pattern

Editor’s note: this column was originally published on Capital Essence’s CEM News. It’s being republished as a bonus for the loyal readers. For more information about subscribing to CEM News, please click here.

Good Morning. This is Capital Essence’s Market Outlook (the technical analysis of financial markets) for Wednesday December 16, 2009.

The inverse correlation between the U.S. dollar and stocks is back in play Tuesday. Stock dropped and the greenback rallied as the PPI figures were higher than expected, while the Empire Manufacturing survey was weaker than expected.

Renewed support for the U.S. dollar drove the Dollar Index to a fresh two-month high, up 0.7%. As a result, the PowerShares DB U.S. Dollar Index Bullish (UUP) added 0.7% to close at 22.79. This, as a matter of fact, had helped confirm the validity of the “test of resistance at 23” scenario that we’ve traced out in our November 23 Market Outlook when we wrote that: “UUP rebounded nicely off support at the bottom of its short-term trading range. Money Flow measure remains positive, signals accumulation. So it seems to us that this rally could take UUP to 23.”

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The graphics below are from our “U.S. Market ETF Trading Map”, which shows the Money Flow measure and trading ranges for UUP and the S&P 500 index. As shown, the light-blue shading represents the short-term trading range. A move above or below that range is considered overbought (as represents by the red shading) or oversold (as represents by the dark-green shading).

dollarbullish_20091215

Chart 1.1 – PowerShares DB U.S. Dollar Index Bullish (daily).

As shown, UUP moved up to test resistance at 23. This is a tough overhead resistance with the confluence of the August low and October-November highs. A sustain breakout above that level will break the series of bearish lower highs trading patterns going back to early January and could trigger a massive short-covering rally, which would eventually push UUP directly into the high 23s area, or last December low. The Money Flow measure also strengthens the bullish case as it surged to new high today, signals heavy accumulation; though, to be fair, that could include some short-covering activities ahead of Wednesday FOMC announcement. Support is at 22.48, or the white line in the chart. A close below that level will resume recent decline and a test of 22, or the bottom of its short-term trading range, will most likely ensue.

After all, the green back has been the dog wagging its stock market tail. Renewed buying interest in the U.S. dollar had put a cap on stock market rally. After closing at new 14-month high Monday, the S&P 500 index gave back all of previous session gain and closed near its intraday low.

sp500_20091215

Chart 1.2 – S&P 500 index (daily).

It seems to us that the index is in a holding pattern as market participants are waiting for the FOMC statement, which will be released tomorrow afternoon. As you can see, the S&P 500 index is currently basing sideway near the top of its short-term trading range. Money Flow measure dropped a bit but still holds above the zero line. The action is neither bullish nor bearish. So do not read a lot into it. Immediate support is at 1100. A decline below that level will put 1080, or the bottom of the 5-week trading range, back into view. Immediate resistance is at 1120. A sustain breakout above that level will opening up for a test of 1150, or the 50% Fibonacci retracement of the 2007 to 2009 bear market down-leg.

In summary, stocks appear to be caught in a holding pattern ahead of Wednesday’s FOMC announcement. Right now the most important thing to look for is the November high on the U.S. dollar. Given the recent inverse correlation between the dollar and stocks, an upside breakout above that level is a negative sign going forward for stocks because, after all, the green back has been the dog wagging its stock market tail.

Thanks and Good Trading!
(By: Michelle Mai for Capital Essence)
© All rights reserved and actively enforced.

Note: Michelle Mai writes technical analysis for Capital Essence. To receive the daily edition, please subscribe. It’s now available at a monthly rate.

大盤等待聯儲

Editor’s note: the English version of this column was originally published on Capital Essence’s CEM News. It’s being republished as a bonus for the loyal readers. For more information about subscribing to CEM News, please click here.

這是Capital Essence對2009年12月16日(週三)的市場技術分析。

昨天美元與股市之間再次表現出反向關聯性。由於生產者價格指數(PPI)高於預期,同時紐約製造業數據大大低於預期,昨天股市下挫、美元大漲。

週二美元指數大漲0.7%,飆升至兩個月來的新高。結果,昨天跟蹤美元指數的PowerShares DB U.S. Dollar Index Bullish(UUP)走高0.7%,收於22.79美元。事實上,這一走勢確認了我們在11月23日的市場前瞻中提出的“測試23美元阻力”判斷的有效性,我們當時寫到:“UUP從短期交易區間的底部支撐強勁反彈。資金流向指標仍為正值,這是吸籌信號。因此在我們看來,這輪漲勢可以讓UUP挑戰23美元。”

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下面的圖形來自於我們的“美國市場ETF交易地圖”,顯示了UUP和標普500指數的交易區間和資金流向指標。如圖所示,淡藍色帶代表短期交易區間,向上突破這一區間意味著超買(紅色色帶所示),向下跌破這一區間意味著超賣(墨綠色帶所示)。

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圖1.1 PowerShares DB U.S. Dollar Index Bullish(日線圖)

如圖所示,UUP即將測試23美元的阻力位。這是一個強大的阻力位,8月份低點和10月、11月高點在這裡重合。有效突破這一位置將打破1月初以來形成的一系列“高點更低”的形態,有可能觸發大規模空頭回補上漲行情,最終將UUP推升至24美元左右,即去年12月份的低點。昨天資金流向指標飆升至新高,意味著大資金在強勁吸籌,也強化了看漲的判斷。不過,公平而言,由於週三聯邦公開市場委員會將發佈公告,昨天應該存在一些空頭回補盤。支撐位在 22.48美元,即上圖白線的位置。收盤跌破這一位置將恢復近期跌勢,從而很可能向下測試22美元的支撐,即短期交易區間的底部。

美元重新爆發的買入興趣抑制了大盤的上漲。在週一創出14個月收盤新高之後,昨天標普500指數全部放棄了前一天的漲幅並收於盤中低點附近。

sp500_20091215

圖1.2 標普500指數(日線圖)

在我們看來,標普目前處於按兵不動的狀態,因為市場參與者在等待將於今天下午公佈的聯邦公開市場委員會公告。如圖所示,標普500指數目前正在短期交易區間的頂部附近橫向整理。資金流向指標略有下降,但仍位於零線上方。這樣的變化既非利多也非利空,因此我們不要太在意它。緊鄰支撐位在1100 點,跌破這一位置將看到1080點,即5周來交易區間的底部。緊鄰阻力位在1120點,有效突破這一位置將開啟測試1150點的大門,即2007- 2009年熊市下跌行情的50%斐波納契折線的位置。

總結:在週三的聯儲公告之前,股市似乎處於按兵不動的狀態。目前最重要的一點是關注美元的11月份高點。考慮到最近美元和股市之間的反向關聯,如果美元向上突破這一位置,對大盤的後市將是一個看跌信號。

(本文作者:Michelle Mai)

© All rights reserved and actively enforced.

﹕Michelle Mai為Capital Essence(錢途集團)撰寫技術分析﹐並為包括市場趨勢在內的數份金融市場投資通訊的首席市場策略師。如欲每日盤前收到更多最新分析, 敬請訂閱