Investors rested yesterday after the huge advance on Wednesday, causing stocks
to trade flat for most of the day. Neither a better-than-expected ISM
manufacturing number, a worse-than-expected initial jobless claims report, nor a
decrease in China's PMI manufacturing figure had much impact on the day's
results. The Dow Jones Industrial Average fell 0.21%, the S&P 500 lost 0.19% and
the Nasdaq gained 0.22%. Volume fell to 855 million shares traded on the NYSE
and 463 million on the Nasdaq. Decliners led advancers on both exchanges by
about 1.5-to-1. Click to Enlarge The S&P 500, along with the other U.S.indices,
put on a show of strength on Wednesday as it vaulted through its 50-day moving
average and now challenges the resistance line of a right triangle at 1,265. A
pullback should receive support first at 1,220, and then the 50-day moving
average (blue line) at 1,208. Click to Enlarge Click to Enlarge We may be miles
apart from Germanyand China, but when it comes to stocks these charts illustrate
that there is a global cohesion. Note that each chart has formed a triangle with
support approximately at the midpoint of the formation. Also note that the MACD
internal indicator of the S&P 500 and the German DAX have flashed buy signals,
and that China's Hang Seng's fast line (red) of its MACD is arching sharply
up and very close to issuing a buy signal. The Hang Seng, it appears, is
slightly behind the other indices but gapped higher yesterday in an attempt to
catch up. Click to Enlarge The world's currency for international settlements
is the U.S. dollar. After three months of dollar strength and general stock
weakness, the PowerShares DB US Dollar Index Bullish Fund (NYSE: UUP ) has
pulled back slightly from its bearish resistance line (red dash) just over
$22.40, but has found support at its 50-day moving average (blue line) at 21.92.
It is in an intermediate uptrend, and if it can close over the red dash line
will confirm a new bull market. But a close under the blue line and the red dash
support line should result in a test of its 200-day moving average (red line) at
$21.60.
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