Stocks fell yesterday after the European Central Bank lowered its growth
forecast and the number of weekly jobless claims increased. Fed Chairman Ben
Bernanke failed to indicate that any new stimulus programs were being
considered, and the press reported that no innovative approach would come from
the president's address that is likely to get past Congress. And so following
the 3% bounce on Wednesday, stocks fell 1%. And the first barrier at S&P 500
1,200, which we discussed in Wednesday's Daily Market Outlook , is intact and
remains as the most immediate resistance to a general advance. Despite some
progress with the European economic crisis, a downward revision of the
region's GDP and a lack of support from the central bank's president
resulted in a rush to the U.S. dollar and gold. The PowerShares DB US Dollar
Index Bullish Fund (NYSE: UUP ) gapped through its 50-day moving average last
week. If the dollar can break from the trading rectangle that has been in place
since May, it is possible that it could stage a successful attack on its 200-day
moving average at just under $22. This is not good forU.S. stocks since for
several years there has been a negative or contra relationship between the
dollar and stocks. And finally, a Bloomberg article points to the currently low
short interest ratio, which is a mere 1.5 for the S&P Composite 1500. This is
down from 2.4 at the end of July. High short interest is considered bullish
since eventually the shorts must cover their positions with buy orders. Thus,
low short interest is considered bearish. And so, wherever we look the evidence
continues to build against higher stock prices. Todays Trading Landscape To see
a list of the companies reporting earnings today, click here . For a list of
this weeks economic reports due out, click here . See Sam Collins' Trade of
the Day: Gold Miners ETF Should Continue to Shine See Serge Berger's Trade of
the Day: Visa Ready to Spring Higher
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