In an interesting trade today, both the Dollar index and the stock indexes are moving higher. Conventional wisdom would suggest that there would be an inverse relationship between the two, however, conventional wisdom is just that. The fact is that cash S&P500 posted a new 14 month high this morning at 1,120.27. Its currently at 116.25, but the fact remains that traders went up and took out that old high at 119 which I wrote about last night. I think it was just too tempting a target. For one, there were undoubtedly some short covering stops up there. We took it out by a handle, and then immediately broke 4 handles. So much for the momentum traders trying to buy a new break out. That has been a painful strategy if you followed it during the rally. This has been a rally where you had to buy dips, not new highs.
In the cash Dow Jones Index, we still have an target above current levels at 10,566. Currently we are at the 10479 level. Higher on the day, but not moving in lock step with the S&P500.
The Dollar index continues to reward patient longs. We have a new 3 month high today at 78.45. Here we sit at our September 09 levels, while the stock indexes are at their Sep 07 levels. Interesting market action, to say the least.
