Stocks mixed to higher, Commodities down again

spy0815.pngIt was generally a slightly higher day on Friday in the stock indexes, on light volume on the option expiration day. I had suggested that the indexes might come back into the area of the moving averages, and the S&P etf did just that, with the bar on Thursday just touching the blue moving average line and then reversing up, and extending a bit further on Friday. The Nasdaq has been stronger and did not pull back very far. The QQQQ was only able to pull back to the faster moving average line at the low on Wednesday. With trends and momentum up I would assume the path of least resistance is higher for now, but keeping in mind volume is light. Commodities are getting quite oversold on a very short-term basis and any rebound could cause and abrupt reversal to the downside in the stock indexes. I say abrupt because of the light summertime volume.
For a long time I’ve been viewing the downtrend in the dollar as overdone and a far too one-sided trade. You can see the extent of the move over the last couple of years on the weekly chart of the US Dollar index above. The last couple of week have finally shown some good upside after a long period of consolidation. Most analysts were viewing the consolidation as a pause before the next leg down. It was difficult being bullish when some of the biggest traders, including a few billionaires, were still quite bearish on the dollar. I think one can trade better ignoring advice, even if it is coming from billionaires. The charts were indicating that the downmove was coming to an end, and that was pointed out numerous times on this blog. The trend indicators have turned up for the first time in a couple of years. Many of the billionaires, include Bill Gross who is well respected, view this upmove as temporary with the downtrend still intact. He may be right, but staying short the dollar through this rebound would have been painful. I guess it depends on the time frame one is trading. This move up has been quick, and with a wide range, and price is now at a point of resistance near the Dec 07 highs. But as long as the trend remains up, the enevitable pullbacks could represent opportunities for long trades. I would be careful chasing here.
I haven’t had a chart of the Baltic Dry Index for some time, so here it is, updated through Friday. This indexes, which suggests prospects of growth, or not, in China and other parts of the world, has certainly been moving with wide swings over the past couple of years. The new high last May looked like a breakout on the chart, but there was a major divergence between this index and some of the dry shipping stocks, such as DRYS, which failed to make a new high. The index has since retraced back to the lower end of the range. The red dots are a standard Wilder parabolic stop, with the parameters slowed somewhat. Perhaps the cost of shipping is lower because of the drop in crude and the rise in the dollar, rather than lack of demand. But I would think there would be some lowering in demand since commodity prices in general have been on a decline.
My last post had a link to a video with some trading rules. Here is another link to a you tube video, but this time seems to be aimed more at short-term traders. It’s a good one. Check it out. Here’s the link: Before He Trades – a Carrie Underwood Parody