S&P vs Dollar vs Bonds

I came across an interesting dollar index chart.  Now I am not trying to call a top, but we might be getting close if you analyze the Dollar vs S&P vs 30 year Bonds.

On the dollar chart we are in a choppy channel. Currently we are at the bottom end of the channel, and we are testing the fib line for the fourth time and we can see a positive divergence on the RSI with every test. Every test of the fib line we got a small pop in the dollar. If history continues to repeat we should see a small pop in the dollar.


We need to compare the slightly bullish outlook on the dollar index with the S&P. On the S&P (/ES) chart we see the opposite. The S&P is strongly trending higher with a potential of 1518 as a test before we see any potential weakness. But with the DX in position to have a prospective pop, I believe we could certainly see some weakness in the S&P.


Now for dollar strength and S&P weakness we should see some positive technicals for Bonds. I think the chart is suggesting some short term strength. The reason for this is a first test of the 50% retracement and a slight positive divergence with the RSI. Now we could see Bonds go lower until a full test of the down channel, giving the S&P time to test 1518, but the Dollar is the real decision maker on this one. If the dollar has a inside day allowing the S&P to test, then I think Bonds will test as well. But on the other hand if the Dollar shows strength we might not see a test on either one.


So my conclusion is that the Dollar is going to be the real decision maker on when we see a pullback in the market. If we continue to see the dollar struggle then my analysis  on the markets are inapplicable. And we could see the S&P continue to grind higher.

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