The dollar put in a very impressive performance today. There had been several tests of the lows since March, with three obvious pushes down, with the last push holding a higher low, and today making a slightly higher high over the peak between the lows. As would be expected, gold and some other commodity related plays were lower. I think this is more evidence that the commodity plays are in their final inning, at least for this commodity bull market. If the dollar rally can gather some momentum I would expect some significant downside in many of the commodity related issues, maybe even crude oil. (There seems to be a bad tick in the middle of this TradeStation chart. I can’t remove it.)
Stock indexes were lower, but were unable to extend the range down, as the bulk of the trading activity today took place within the tails left from the previous day. The Nasdaq created an inside bar, with the S&P taking out yesterday’s low by a couple of ticks. I would think a slide in oil could halt some of the downside in the stock indexes, at least temporarily. The big push up in oil three days ago does not seem to be holding and some negative momentum divergences are possible. The trend is up, but looking tired in my opinion. Every time I think a top is in, oil just ignores the indicators and pushes to a new high. One of these divergences will work. If so, the trend will eventually turn down and shorting the rallies would be safer than trying to pick a top. Oil and the stock market do not make a very good inverse correlation in normal times, but I would think breaking this huge uptrend would be positive for stocks. Barring that from happening, the stock indexes look lousy right now.