The SPDR S&P 500 ETF (NYSE:SPY) gapped higher today and continued to push until 10:30am ET. At this point, the SPY ran into major resistance around $109.35-$109.50. After trying multiple times to take this level out, the SPY started to fall. It fell all the way down to the 200 moving average and the 20 moving average. This area was and is obviously big support. While a small bounce is likely, should that level fail to hold, the SPY could head to gap fill at $107.85.
The reason for the markets drop was a sudden move lower in the Euro. You can follow the Euro by looking at the CurrencyShares Euro Trust (NYSE:FXE). As the Euro dropped, the Dollar spiked higher. You can also follow the Dollar by looking at the PowerShares DB US Dollar Index Bullish (NYSE:UUP). The markets have been held hostage by a dropping Euro and a jumping Dollar. As long as the Euro drops, the markets will only have small bounces a long the way at best. Should the Euro bounce for a week, expect the markets to bounce for a full week as well.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
