|EUR/USD (source: freestockcharts.com)|
As the U.S. Dollar fell yesterday, $SPY rose 0.84% to close at 132.56. Since EUR/USD has already made a decent move to the upside after breaking through a multi-month downtrend line, I think the S&P 500, or $SPY in this case, is setting up for a trend reversal, or correction at least, in the steep uptrend from 12/11/2011 (blue line). If there is a strong trend reversal and confirmed technical breakdown, it could be a decent short down to the ultimate uptrend from the October 2011 low (white line), which would then decide its fate. That's if and when it tests the uptrend again. Remember the whipsaws in EURUSD this month before it finally made its decision to breakout? Last Friday on Bloomberg TV, Tom DeMark, creator of the DeMark Indicators that signal market exhaustion, predicted that the S&P will top out between 1,338-1,342 this week (SPY: 133.8-134.2). The S&P hit a high of 1,328 today, and the downtrend using the 2007 and 2011 peaks hits around 1,333. So the market is at interesting levels. As always though, it's all about timing. Trend lines always win in the end, not someone's price target. Below are short and long-term charts of $SPY. Check out the volume as well. It's been trending down since the August crash.