Decision Time for Stocks and the Dollar

The Technology sector continues to shine as the NASDAQ charged higher on Monday, rising 1.1% on below average volume. The Index confirmed a new 52-week closing high, however the S&P 500 is still trading within the intermediate range, and is a stone throw away from hitting new highs.

For those who missed it, we have posted a couple bits of new content today. Visa hits an all time high, and a short list of some Chinese microcap stocks I am following. Be sure to take a moment and check out some of those names.

As we can see on the 60-minute S&P 500 chart, prices are clinging to the upper level of the intermediate trading range. Prices hit an intraday high of 1117, but ultimately closed below short-term resistance at 1115. As I mentioned last week, this 25 point trading range carries a measuring target in the 1135-1140 zone, so watch this area closely if prices continue their run.

 

 

Daily S&P 500 volume was relatively low on Monday, volume came in well below recent average levels. At this point investors should be watching for a follow-through day as confirmation of a new intermediate uptrend. On a FTD, we should see the indices advance 1.5% or more on very heavy volume. I have highlighted the key range to follow.

 

 

The NASDAQ appears to have decisively broken the intermediate trading range as price cleared resistance with a gap to the upside. One should expect to see heavier volume on a breakaway gap however, so we will be watching the next few sessions carefully in case the window fills, and we see exhaustion. For now, Technology stocks appear to be leading the way higher, as they have done for most of this bull market.

 

 

The Transports continue to charge higher, prices rose .9% during Monday's session on low volume. I have highlighted the short-term ascending price channel currently in play.

As expected, the Dollar Index has reached resistance in the 78 area. This area is important for a few reasons:

During the panic decline in December 2008, prices put in an intermediate climax low, and ultimately bounced to new highs from this level.
In June 2009, this level served as support, and wasn't subsequently broken until after a choppy August-September filled with whipsaw action.
Now, with 76 clearly broken, this is the next major level to watch, the following key range is the 80-81 area.

 

 

Last up, a look at the VIX from out Market Internals page. The Internals page features a collection of charts to help you gauge the overall health of the general equity markets. If prices are currently trending, then these charts can help you measure the strength and depth of the move.

The VIX is currently trading near support at 20.5, a key level that has been in focus since late October. A clear breakdown in the VIX would help to confirm a new uptrend in equity prices.

 

 

As always, the long term trend. You can also Follow us on Twitter or Facebook, and sign up for our Portfolio Tilt updates by e-mail , delivered every morning.