On Friday we got a long term buy signal on the S&P 500 index when the 50-EMA crossed up through the 200-EMA. Let's not break out the champagne just yet because these two moving averages have crossed each other four times in the last three months.
When the S&P rolled over in early May the USD index rallied hard. As you can see from the chart, the S&P started to bottom in June and July and entered a trading range of indecision. During this time of indecision the USD index moved down with a sideways chop. It looks like a sell signal with be generated on the USD index within the next week or so as the 50-MA moves down and through the 200-MA, also known as a death cross.Perhaps more dovish talk by Fed Chairman Bernanke at Tuesday's FOMC meeting will be the trigger.
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