Technical Tuesday – Trouble at 2,728, Again!

The market is so predictable.  

There's a ton of money to be made from predictable, so we're certainly not complaining.  After a meaningless spike higher, the S&P calmed right down and finished right at our 2,782 line (2,730, actually) and this morning, as expected, the index is pulling back as the Dollar rises back to the top of it's range.  Eventually, one of these will break out and the other will fall – but which one will prevail?

We had a good run on /ES, all the way from 2,600 (barely touched two weeks ago) back to 2,728 and a 28-point run means we're looking for a 5.6-point retrace back to 2,723 (weak) and 2,717 (strong) and, even as I write this (7:30), the Futures bounced off 2,723, failed 2,728 again and are now testing 2,723 again but I think they'll fail as the Dollar is at 92.87 and rising and that's up half a point so we'll look for 2,717 and see how that's doing.  The Futures on the S&P (/ES) pay $50 per point so it's a quick $300 if that bet plays out and, of course, simply stop out over 2,723 to limit the risk.

The Dow is also having fun around it's own 20% line but, in this case, it's been unable to get over the line (25,200).  26,250 is the 25% line and that's 1,050 away but we'll call it 1,000 so we can call the bounce lines 200 points and that makes our up and down range from 25,200: 24,800, 25,000, 25,400 and 25,600 so we can chart that like this:

The Dow strayed down to the 200 dma at 23,750 so the run to 24,950 yesterday was 1,200 points and we'll call those rejection lines 250 points to 24,700 (weak) and 24,450 (strong) but that would take us back below the 20% line and that would be a big negative so very bad if 24,700 does not hold.  

Exxon (XOM) and Chevron (CVX) have been boosting the Dow as oil and gasoline test new highs but what's great for them is not so good for the industrials that use oil and gas to produce goods but, fortunately, there are not too many
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