A Longer View

Asia ex-China is up across the board, and Europe is down. Commodity futures and forex are up and down, with forex reflecting yet another dip in the US dollar. The dollar may be close to a low, but not quite there yet.

Volume in the broad market as measured by the NYSE expanded as prices rose yesterday. The overnight action looks stable. I continue to feel that the markets have higher targets in mind.

The Dow industrials are setting up for a test of the February highs, while the Dow transports have exceeded them. So has the Russell 2000.

Odds are now that the S&P will follow, yet it is the Nasdaq that is lagging. While it could catch up quickly, this should serve as a warning that perhaps all is not well internally. The Nasdaq is the risk and animal spirits indicator. It usually leads the market on the way up and on the way down, thus setting the tone for bull and bear moves.

That said, I do want to share a monthly chart of the S&P that may hold some clues as to where the market is headed. I believe that markets, even manipulated markets, are precise in what they accomplish. Sometimes it just takes a while to see the precision.

The chart below is showing an internal trend line from 2000. Just because it was over a decade ago doesn't mean the market doesn't remember it. Collective memory operates in each and every participant in the market whether they know it or not.

This chart only implies that a move to the 1400 area is possibly what the market has in mind. It is by no means certain.


Interestingly, note that a monthly chart of the Dow yields the same relative target but does so from an up-sloping trend line.