Any Excuse to Rally

Pick your reason we rallied today:

  • POMO
  • T + 3 seasonality play
  • End of month/quarter window dressing
  • USD reversal
  • Bounced off support at 1300 in S&P 500

Whatever your opinion, the market moved higher today and appears to want to move higher in the near term.

Below is a chart of the intraday S&P Futures with the US Dollar Index overlaid  in red.  Look at the beautiful reversal in the USD just as we were hitting 1300 off the open in the S&P.  Coincidence?  Magic?  Both?

Below is the S&P 500 Index with the US Dollar index overlayed and a rolling 100-period correlation between the two in the lower pane.  These instruments have a clear negative correlation (most of the time).  Hence, you should stay glued to the USD during the trading day, because it might just be trying to tell you something.

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