CHARTING MONEY: A (Brief) Reversal Of Fortunes
12 Mar 12:00
By Stephen Cox, CMT
A Dow Jones Newswires Column
NEW YORK (Dow Jones)--The long-term bearish dollar is generally firmer
Wednesday and it's set up for a bear market rally. The downtrending U.S.
10-year yield is testing technical support.
And the stock market is down, but not that far below breakdown support. A
slightly firmer Wednesday close would give it a shot at a rally.
The money markets may be primed for brief reversals. If that's the case, then
the most reliable signal for a dollar/stock rally will come from the U.S.
10-year yield, which is testing technical resistance.
The nearby U.S. Dollar Index, which bottomed last week at 97.57, has poked up
into the 98 handle. The contract is bearish unless 98.81 resistance is taken
out on the Friday settlement.
For now, the nearby Dollar Index is evidently pointed down to 95-area support
by the end of April. But a move to 99.86 would considerably delay a renewed
downtrend.
A dollar rally may correspond to briefly firming U.S. rates. The U.S. 10-year
yield is holding above long-term support at 3.559%. On the outside, a
correction could take the yield up to 3.68%. The signal for that move would be
decisive trading above 3.574% - and that number is practically the current
yield.
Gratification, for those looking for a yield pop, may be more or less
instant.
Going To Rally ... Need Transportation
A corresponding correction of the stock market is more of a long shot,
according to the charts. But the prospect has to be taken seriously, because
losses so far Wednesday have brought the indexes only slightly below breakdown
support.
A bear market rally depends on a recovery of the drastically weakened
transportation sector.
The breakdown of the indexes' October - December uptrend three months ago
determined lowest support for the Dow Jones Industrial Average at 7579.70.
Analogous support for the NasdaqComposite is 1278.35. Both indexes have
slipped under support Wednesday morning. Of course, closes Wednesday below
support will be a breakdown on the daily charts.
In that case, the daily charts will square with the long-term charts, which
turned bearish last week when the Nasdaq took out 1317.78 support. The indexes
will then be going for a test of those October bear market lows - for the DJIA,
that's 7197.49, and for the Nasdaq, 1108.49.
The Dow Jones Transportation Average, now trading just under 1930, took out
its bear market low of 1942.01 on the Tuesday close. There's no chance of a
meaningful rally unless the DJTA closes above that bear market low.
For more technical analysis see: Dow Jones Newswires, N/DJTA; Telerate, page
4073; Bloomberg, NI DJTA; and Reuters key word search "Charting Markets."
-By Stephen Cox, Dow Jones Newswires; 201-938-2064; stephen.cox@dowjones.com
(Stephen Cox, a chartered market technician, is chief technician for Dow
Jones Newswires.)
(Data by CSI, Commodity Research Bureau)
(END) Dow Jones Newswires
03-12-03 1200ET |
