Today erased yesterday's gains. This type of action is typical of a topping formation. What type of top this is, is unknown right now but it will reveal itself. This does not mean the bullish trend is finished overall just taking a pause for now. This action is very much tied to the action of the dollar today. Depending on how you look at the chart of UUP we either have a bull flag breakout or the formation of a cup and handle. Either way the price target for both is the 24 - 24.50 range. This also coincides with another area of major resistance. This could easily mean that the market is due for some downward momentum over the next month.
The SPY and IWM both took their cue from the Dollar move today. This move today is not enough to change my overall posture currently as the uptrend is not in jeopardy yet. Solid support on the SPY at around 110. If we go that direction it will likely take a while as the projected move on the UUP will take 4-6 weeks. IWM is still moving sideways at the present time just as yesterday. Which way we go is very much in question. If we move up from here expect a move to the 65-66 range. If we go down there is support at 62.50 and additional between 60 and 61. 61 would be the most likely resting point. This is relatively short term in nature as the bullish up trend has NOT ended yet.
All trades today were positive except for XHB and JOYG. This has not changed the current posture yet. I did enter a new covered call trade on TEVA today and will be working this as I did the last time. This week is getting very interesting and will determine forthcoming posture. I am including a chart of UUP as this symbol is representative of the dollar index and will help gauge future price action. XLB has some movement down to get a little closer to support at 33 but should prove to be a viable entry at some point this week or next. This is slightly bearish for the dollar. Also note on the UUP chart the bullish MACD and Stochastics.
