Tuesday Interest Rates and the US Dollar
Disclaimer: All charts and comments are intended for education and discussion purposes only. No investment recommendations are being offered. Please do your own research and take responsibility for all investment decisions that you make. Questions and comments related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Breadth | THU - Commodities & Currencies | FRI - Market Sentiment | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |
The chart above is in response to a really good point made by someone yesterday. Yesterday's post mentioned the recent bullish chart breakouts of the INDU and TRAN. The comment was that both indexes had similar breakouts to new highs last summer, just before the bottom fell out from under prices.
The difference, though, is that last summer the new lows were telegraphing that there was a serious problem developing under the covers in the market. On July 18, the NYSE new lows spiked above 150! That is bear market territory while at the same time these Dow indexes were at highs. This was a very bearish negative divergence.
The current breakouts of the Dow Indexes look a whole lot better to me than the breakouts last summer.
For one, these breakouts came after enormous, important tests of the lows where the percent of new lows spiked to unprecendented levels. Huge spikes like this are usually associated with climax selling in which bottoms are formed.
More importantly, the bullish breakouts of the indexes occurred after the new lows had settled way down to levels that support an uptrend. And I think this is the key and points out really well why I am so focused on new highs /new lows.
Last week I mentioned that the 2Y Treas rate was likely to break out above the level of Fed Funds indicating that the Fed is close (or done) lowering rates for now. I usually pay more attention to the TBill rate, but Ken Tower focuses more on the 2Y and now I see why.
I couldn't find a chart of my own that I wanted to use, so I just borrowed one from Danny Merkel author of Gold Stock Prophet. If the US Dollar index breaks above the 50-day, I think the target is the 200-day, and that is quite a move. Every article written lately includes lots of comments about the dollar, so I won't say any more.
