SP500 cash posted a high today at 1117.68, just 2 handles away from its previous 14 month high at 1119.13. Looking at a weekly continuation chart, we are right where we were in September/October of 2008. The Dow Cash posted a high today at 10,458, just 108 points from its previous 14 month high at 10,566. I still feel that between now and the end of 2009, we will go after these highs, as I wrote this morning.
The dollar rally continues to be something which will weigh on that possibility, but we have held surprisingly tough in these stock indexes despite the rally in the dollar. After all, we are very close to posting new highs for the year. If there was a more direct correlation between the dollar and the stock indexes, we should be in the midst of a more powerful correction. So in effect, the stocks are getting bad news, in the form of a strong dollar, making our stocks less attractive to foreign investors, yet the stock indexes are holding up.
Any time we get underlying strength, when the fundamentals would suggest other wise, its smart to take a look at what’s really going on via the chart picture, and not what your head or you heart is telling you the market “should” be doing.
And finally, quite frankly, this time of the year the trade is next to meaningless, due to the lack of players and lack of volume.
Lets wait to see what kind of action we get by the third week in January.
Good Trading
