Is it the Commodities, or is it the Dollar?

It's only 1:30pm and already this has been a wild day!  The market opened lower, with the Dow trading off about 70 and the SPX off about 6.5, and then, after a New Jobless Claims print at 434,000, an above-expectations PPI report, and a Retail Sales miss, the market decided it had all information that it needed to rally, the SPY caught a bid at the 50 SMA and is now trading higher, with the Dow plus 65 and the SPX plus 6.50.  The good news is that the market is not closed yet for the day, and anything can happen.  And probably will!

Oil, Gold, Silver and Copper all traded down hard at the open, and now are well off the lows for the day.  Oil is currently at 98.38, after being as low as 95.25 and recently as high as 99.72.  Gold sold down to 1477.60 and has recently traded as high as 1506, currently trading at 1499.  Silver opened weak, trading as low as 32.30, and has recently traded as high as 35.89, currently trading at 34.74.  The rest of the commodity complex is mixed.

The Euro has had a similar trip, trading as low as 1.41 and recently as high as 1.43, currently trading at 1.426.  The Dollar, which I today think is driving these markets, has been as high this morning at 75.65, and recently as low as 75.11 is currently trading at 75.12, off on the day from the previous close.  If the Dollar can continue to trade above the 75 level, I suspect that Mr Market will continue to have problems moving much higher.  But then, what the Heck do I know.

The Bond market is been under pressure most of the day, with both the 10 year Note and the long Bond selling off.  The Note is currently trading at 3.22% and the Bond at 4.35%  The ETF that  best tracks the bond market  (in my opinion of course) is the TLT, which is generating an interesting candle today, with a Bearish Engulfing candle taking out the last 2 days.  As the TLT has been correcting for the past 5 days, this is likely pointing to another run to the up side.  I did not offer a buy recommendation when TLT generated a Buy signal on 4/13 as I was focused on the equity market.  I also did not offer a buy recommendation when the UUP, the Dollar ETF, generated a Buy signal on 5/5 for the same reason.  But these two ETF may well be pointing us to a new trend in the equities markets.  If the Dollar wants to trade higher, which it is telling us that it wants to, and if the Bonds can trade higher, as the TLT is telling us it wants to, then all that is left for us to do is watch for the Sell signal that is surely coming for the DOW and the SPX and the rest of the equity indexes.

I am again today cautious... waiting to see what develops.  This volatility and choppy trading in the markets has often marked market tops.  With the end of QE2, a crumbling housing market, New Jobless claims again raising, 3,700,000 mortgages 90 days or more in arrears, and food and energy prices continuing to climb, I think Mr Market is facing increasing  head winds.

And I think some point in the near future, the impact of this St. Louis Fed Chart is going to be felt.

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And this little display of the national employment picture.

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Stay Strong!... the next trade is coming our way.

Best To Your Trading!

Bill