Tuesday, March 1, 2011

US Dollar Not Cooperating For The Bears

One of the arguments supporting the bearish case for stocks has been the potential for a sharp rise in the Dollar. Quite a few labeled the November 2010 rally as 5 waves up, but it really was a force fit, which in retrospect is clearly wrong.  Now, we can see the failure at the 200dema and what appears to be 5 waves down from the 11/30/2010 high, though it is not entirely clear.  The only thing going for the Dollar is the potential for a positive divergence against the 2/2/11 low or the 11/4/10 low.  Another pop in the Dollar might lead to more selling in stocks.  However, the trend in the Dollar is down, and a break of the long standing trendline from March 2008 should provide another boost to the still ongoing rally in stocks.

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