The consensus of our technical indicators has been on an intermediate-term sell signal for the U.S. dollar since early August. Its latest attempt to rally failed at its important 30-week m.a.
And the short-term charts are not encouraging. The dollar tried to rally in early January but that attempt ended at a lower short-term high. And now another attempt seems to have ended at an even lower high, and the dollar index is potentially breaking out of a symmetrical triangle pattern to the downside.
Will Monthly Strength Period Keep Market Rally Going?
As we have been reminding subscribers we are in what we have always referred to as the ‘monthly strength period’.
The market has a strong historical pattern of often being up the last two days of each month and the first four trading days of the following month. The influence is the sizable extra chunks of money that flow into the market at month ends, from month end stock and bond dividends usually marked for automatic re-investment, month-end contributions to 401K and IRA plans, inflow from those who follow a strategy of dollar-cost averaging into the market on a monthly basis, etc.
Can that short-term seasonal effect hold the market up while the short-term overbought condition above the 50-day moving average has everyone expecting at least a short-term pullback, and many expecting the intermediate-term rally, or even the bull market, to end?
To read my weekend newspaper column click here: The Market’s History Of Seasonality Continues!
Subscribers to Street Smart Report: There is a hotline from last evening and an in-depth Markets Update and Signals report from yesterday in your secure area of the Street Smart Report website.
Images: Flickr (licence attribution)
About The Author
Sy Harding publishes the financial website www.StreetSmartReport.com and a free daily Internet blog at www.SyHardingblog.com. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!