The dollar should see support near these levels, around the July high, 76.70. A strong dollar means lower stocks prices, so on a bounce, watch for stocks to pullback. Here is a current chart of the US Dollar index:
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I’m also paying close attention to copper here as it approaches the 20 day MA. If prices get rejected here, we may see the commodity trade back to the lows, also giving the market another reason to pullback.
However, should we trade above the average, we will enter a volume pocket overhead that could potentially shoot us back up to the high 3s. Which in turn will lead to higher stock prices.
So in order for this rally to continue, we must see copper trade into the volume pocket overhead, and the dollar break support. Given the location of the two, I’d say we’re ready for a pullback.
But, we have JPM & GOOG reporting tomorrow, will they determine the direction of the market? Who cares. Cut the noise and focus on copper and the dollar, they will lead you in the right direction.
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Hey RC, let’s say the FT article about China’s estimated copper inventories being more like 1.9 mil “tonnes” is true….where does that put copper’s price at?