What looked like a breakout this morning turned into a nasty pullback, and the resistance at 1296 came back with a vengeance. The market did manage a positive finish, and volume was decent but not high enough to consider this a key reversal to the down side, but enough bulls probably got burned today to warrant a pullback from here. MACD histogram and RSI are both turning negative, so I suspect we are in for a pullback as soon as tomorrow. Until proven otherwise, pullbacks should be considered buying opportunities, or at least opportunities to find the best relative strength stocks, and that is what I plan to be doing.
Crude oil was due for a pullback, got it, and almost to the penny, hit the target at mid range. It bounced back very strongly today, and is now poised for a breakout attempt.
Gold also made a nice move today, right into the 50dema, where it has recently encountered resistance.It is also showing some support at the 200dema, and the two averages are converging, so one is going to give real soon.
The bond market comes with this warning: "Does not play well with others". The stock market has partied like mad after coming off the October low, while this has barely budged. That does not bide well for a continued rally.
Neither does the dollar index, which has not been updated yet (UUP had a small decline, so I imagine this did as well). However, this has some fierce resistance at 81.50 and could pull back from here, which should help equities. A breakout past 81.50 could mean trouble. The recent rise in the dollar has been slow and somewhat contained, and the "dollar strong, market weak" correlation we have seen for the last few years is not working right now, but I expect it will work again in the near future.
Another day, another breakout failure. I am now on pullback watch.
I will have the new highs update shortly.
