Technical Analysis update – USD & S&P 500

A quick update on the technical picture, highlighting major support and resistance levels.

Currencies are grabbing headlines these days thanks to constant tug-of-war in the race to the bottom. Japan announced quantitative easing today. Last week, the US Fed signalled another round of QE and Bank of England has maintained its QE stance.

With that, here is a technical picture of the US Dollar… the rather ominous death cross on the USD doesn’t bode well for its trading partners and is probably in anticipation of QE2 measures leading to downward dollar spiral.

The recent US dollar sell-off was rather quite fast and the chart now signals a recovery from the oversold conditions…The recent sell-off in USD is good news for equity markets… S&P 500 is breaking above the 1150 mark today… finally, after trying everyday for the last 7 trading sessions.

The 50 day SMA is trending upwards and could cross the 200 SMA before the end of 2010 giving the all clear Golden cross.

One caveat is that the September rally wasn’t accompanied with increase in volume but then again the average volume relative to prior years has been low in 2010.

US markets up 2%, Canada up 1%…

… on anemic volume!

Whats Driving the markets? David Rosenberg

David Rosenberg sheds some light from a quantitative perspective in this AM’s report …

 When we go to the weekly data from the Fed, we see that “trading assets” on commercial bank balance sheets expanded to $325 billion in the past two weeks from $297 billion. And, when we go to the Commitment of Traders report, we see that there has been a big swing in the net speculation position on the S&P 500 “E-minis” on the Mercantile Exchange (futures and options) to a net long position of 28,172 contracts from 15,155 net shorts just two weeks ago. That’s a big part of the bounce-back — prop traders and short-coverings. Nothing fundamental here, as far as we can see.

S&P 500 is up 1+%  on increasing trade deficit & successful sale of Greek bonds…

S&P 500 Technical Analysis – Down from here to re-test July 2009 lows?

S&P 500 broad market index is likely to continue downtrend and re-test July 2009 lows…

Head & Shoulders Pattern projecting S&P 500 at 870

Chart: Stockcharts.com

Fibonacci Analysis, Descending Triangle & MACD crossover

Chart Source: Stockcharts.com