Wednesday, March 4, 2009

The market still tied to the dollar

So far the T1 pattern we've been watching on the dollar chart is playing out exactly as expected. The size of the first leg suggests that the second leg of this move should take the dollar to the 94-95 range. I really won't be looking for a more sustainable bounce until the dollar reaches that level.

At that point we can expect a test of the blue consolidation zone. That should take quite a bit of pressure off the market. I expect the market will bounce back up to the 800/850 level.

Watch the dollar. If the dollar rally starts to accelerate we could see stocks start to move down rapidly like they did in the fall. If the rise in the dollar is more orderly then the decline will probably drag out for one more daily cycle in the stock market and bottom in late Apr. or early May.