Brief Update

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The chart above is the US Dollar index. Today it broke below and closed below the often noted "trendline" across the 2008 and 2009 lows. Some seem to expect it to lead to a free fall in the dollar. My expectation would be that the break of a suspect trendline would be an ideal reversal point. The daily MACD is now in a nice bullish divergent position, so the technical analysis fits with this idea. Reversal points often occur slightly above or below established trendlines.

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The Dow and S&P now both have exceeded the April 2010 highs. So this will create some headlines, run some stops, and set-up a double top possibility. The next possible time relationships that come into play are that as of today the move up from the August lows equals the time of the prior three "waves" combined (blue boxes). Then in about 2 weeks, the time up from the July low will equal the time from the February low to the July low (pink boxes).

Another outstanding feature of today is that the S&P 500 closed above the 3 standard deviation Bollinger Band. This is a rare occurrence. The last time it occurred was 6 days prior to the March 2000 "tech bubble" bull market high. I looked for other times it occurred back into the 80's, and it was rare. The other times the market generally continue higher. It was more common for the market to break below the lower band, but this only occurred every couple years on average.

Looking back through the charts, when the S&P broke out to a new high above a prior intermediate high, the market typically did not close back below the old high if the trend was to continue. Then there were times like July and Oct 2007 where the market broke out to a new high, but then closed back below and led to sharp corrections. So that seems like the first clue to look for here over the next 1-2 weeks.