Monday Morning Chartology
The S&P continues to perform well. It has busted through two of the prior lower highs (the orange 3 and 4) and reset to a short term uptrend. You can see the congestion (the red 1,2,3 and the orange 1,2) that I have mentioned. Nevertheless, the momentum remains to the upside and it seems likely that the former all-time high will be challenged.
Update on best Market indicator (short):
Once again, I included a chart of the dollar. You can see that it looks to have made a double bottom. If the inverse correlation that has existed with the Averages since January continues, this could be a negative for stocks.
The long Treasury had a rocky week. It traded through the lower boundary of a very short term uptrend and a key Fibonacci level. It is now approaching a prior short term low. Failure to hold above it would suggest either rising risk of inflation (see GLD) or a less accommodative Fed (is that possible?).
After a great run, GLD has run into some, at least, minor headwinds. One day after voiding a very short term downtrend, it traded back below the upper boundary. On the other hand, it held above a key Fibonacci level. If that is taken out, then the lower boundary of its short term uptrend becomes a target.
***overnight, the April German business climate index fell, China’s government debt hit 237% of GDP and the Bank of Japan revealed that it was among the top ten shareholders of 90% of Japanese companies (that has to end well).
The latest from Jeff Gundlach (medium):
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