This is a Key Price and Time Week
The SPX made a new high yesterday to 1003.61, before closing at 1002.68 (+1.5%), which is +11.0% YTD, and +50.5% in 103 trading days from the 3/6/09 666.79 low.
In the previous commentary I said that this week has key time symmetry, and it is also a key price zone from 1010-1015, so the highest probability is for a reversal. There are also negative momentum divergences in the major indexes, and short term price is extended with the SPX +15.4% low to high in just 18 days, which is also the time period of the last leg down from 956.23 to 868.32 of -9.1%.
Another red flag coming into this week is that the SPX has closed higher each of the last 3 weeks, with a negative divergence in the weekly UVOL/DVOL ratio sequence of 2.69, 1.85, and 1.49 last week into month end. This is not what you like to see as the market is advancing to new rally highs.
The biggest % up moves by the SPX occur when the $US dollar is down and that drives the energy, materials, and other commodity stocks higher, and the reverse is also true. Yesterday, like last Thursday when the SPX was +1.2%, the SPX futures were +10 points in globex as the USD was trading to new lows at 78.12, crude oil was trading at 71.25, and other commodities were also trading higher. This set the stage for a gap up opening, and that is what we got, led by the energy, materials, and gold stocks. That remained the leadership all day as the SPX went out +1.5% to 1002.63.
This morning, at 8:00 AM the USD is trading higher, crude oil and other commodities lower, while the SPX futures are -8.0 points, so it will be a down opening if the inverse relationship holds. It is significant to note that 1014 is the first significant Fib RT (.382) to 1576 from 667, so it is obviously a key price zone, and the market is also in a ST-O/B condition.
If you are one of the many that have missed this entire market, now is not the best of levels to give into your emotions, which obviously failed you miserably all the way up to this level.
Have a good trading day!
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