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S&P & the US Dollar Index

It was a sea of red at the close of the S&P500 on Friday as the US Dollar Index (DXY) swung from 112.16 back up to 113.29.

Brent Donnelly noted in his morning market letter that the previous 24 hours had been a rollercoaster ride for the S&P500 and that the price action from open to close (-2% to +2%) had only happened 11 times previously since 1980.

He also wrote that the flush in the S&P500 coincided with the seasonal low date for equities.

Looking at the close of the SPX yesterday, the only encouraging thing is that we are within the descending channel. I believe this breaks higher eventually. We made a new high yesterday and held above the previous day's lows, so quite bullish. The open was a classic gap and trap, so any weak bulls were removed from the market. We may have even stopped out some weak shorts on the open if they had used the bullish reversal to sell into on Thursday's close.

There is currently nothing to do if you are bullish until we close above the 3802 handle as price action is still favouring the bears. Once we break the structure above, we can then aim for a long into the end of the year.

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