Thursday Mid-day

The market exploded higher this morning, opening up 150 Dow points, and at noon is trading higher, up 180 points.  All the major indexes are higher with the Transports the best performer, up 2.44%.  There are any number of explanations for the move, from the reports out of Europe that interest rates could be increased as early as April due to inflation concerns and the surge in the Euro above 1.385, to the drop in new unemployment claims to 368,000, to the better than expected Services ISM print, to the early reports of a decline in oil prices, to the Retail Sales reports for Feb that print higher than expected.   Take your pick... probably all of the above.

As of 12:00pm, the Momentum Change indicators are still firmly on the Bearish side, as they have been since Jan, 20, and they not likely move to neutral this afternoon.  Since he February 18 top and the February 22 bottom, the market has been forming a series of lower highs and higher lows, effectively painting itself into a corner, and pattern is consistent over all time frames.  The 5 minute chart indicates a downtrending resistance about 133.25, and if a candle can close above that level, there is a probability of even higher prices today.  If the SPY can't trade higher than 133.25 on a 5 minute candle close, it is likely the market will give up some of its gains.

As a brief round-up of price action, WT crude is off 0.93, trading at 101.30, Brent is off 2 at 114.38, Gold is off 13.70 at 1424 and silver is off .36 at 34.47.  The rest of the commodity complex is catching the hot money, with the whole food complex up big.  The Euro has been flying, with the Euro trading 1.3941, up 0.59%.. a huge move, while the Dollar falls to 76.58.  Bonds are also weak, with the 10 year Note trading off 3/4 at 3.5591 and the Bond off 1 at 4.6277 on top of a large decline yesterday.

I have been expressing concern about the performance of the Dollar, and it looks now like it has violated significant long term support.  Here is the current chart, courtesy of StockCharts, showing the violation of a 3 year trend support line and is nearing a major support line.

This a development that has major long term implications and is perhaps the least well understood by the investing public.  We are like fish swimming in water, unaware of the water, as we buy and sell in our domestic currency, unaware of its changing value.

I am unhappy that the trades got stopped out, but there is another trading coming along shortly, either on the short side or the long side. I remain committed to a trading discipline that will identify market momentum, while protecting capital against painful losses. No loss is fun, even small ones, but capital remains intact, allowing a trader to move on to the next trade.

Best To Your Trading!

Bill