Real quick as the opening bell beckons. For one... we held support and this morning broke resistance.
I think that sets us up for a date with the wedge... topside. The same one we failed at recently with a $SPY $420 tap.
Easier said than done of course.
What we need for this to happen is clear at this point. The US Dollar has been walking lock step with the S&P500, in an inverted fashion. We need the dollar to further weaken and based on the recent correlation, we should see another test of SPY $420. A big rejection again perhaps?
From there $425 wedge.
I see two scenarios... yes call me captain obvious.
Captain Obvious says: "The stock market will go up or down. Or perhaps both?"
I'm calling it and let everyone know you heard it here first.
The stock market will go up, down and either further down, or higher. There. I said it.
From where I sit. We have an either baffle everyone rally to near new record highs in October/November. Or we rally before the next big lef lower to fresh lows for 2022.
Short term watch the US dollar for weakness and subsequent stock market strength. Of course the dollar weakness will stoke commodity prices higher, including oil, so from an inflation perspective this is not bullish. But short term it will be. And that is what we are seeing now.
Make no mistake about the current correlation. Its a 2022 theme for sure. And if the US Dollar is indeed in the midst of a medium term swoon, this will be bullish for equities in the short to medium term.