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Apple remains below its 30-year resistance line and the Nasdaq 100 has been weak of late as it cracks below a bearing rising wedge support, after hitting key resistance.
The Power of the Pattern reflected back in February that the top of the channel and its 50% Fib retracement level should stop the rally in the NDX 100...and it did (see post here)
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Bullish Dollar sentiment is reaching levels seldom seen in the past four years as the Dollar is attempting to break resistance line (1) for the 4th time since late 2010.
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Gold & Silver pushed below support recently and now Copper is working on a similar breakdown. In the past Copper weakness was a message of a global slowdown and a sign that "Deflation" was taking place.
The Power of the Pattern suggested in the chart below (published 5 weeks ago) that "Global Economies looked to be Rolling Over and that at least, short-term de-flation was at hand!" (see deflation post here)
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Investors often look to precious metals as Safe Havens....During periods of "De-Flation" metals often deflate in price as well.
The breakdown of Copper and the CRX Commodity index does increase the odds a good deal that softer global macro conditions are in store.
A good deal of the time the U.S. Dollar and the S&P 500 move in opposite directions, acting like the are on a "Teeter Totter!"
They haven't exactly moved in opposite directions over the past 7 months as the 500 index is up 22% and the U.S. Dollar is up 1.7%-
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Trading stocks, based upon what the U.S. Dollars action will be, has been a disappointing strategy over the past 7 months due to a lack of inverse correlation between the Dollar and S&P 500. Now the Dollar is facing a resistance zone for the third time, since last 2010.
It wouldn't surprise me a bit to see the "Teeter Totter/Non-Correlation" effect come back if enough buyers get together and push the Dollar past the resistance zone highlighted above!
Five weeks ago the Power of the Pattern reflected that two of the broadest measures of the stock market, were up against key resistance levels and that prices back in 1999 could impact portfolios today (see Party like its 1999).
Below is an update to how the NYSE and Wilshire 5000 have handled this resistance, 5 weeks later...
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This weakness does not mean the mother of all bear markets is taking place or will. When is comes to portfolio allocations/risk allocation management, in the past, investors usually want to see these broad index's going along for the ride. It can pay to reduce risk asset exposure up against long-term resistance lines and so far, for those that did, it helped them maintain higher portfolio values.
Until these two can take out key resistance, it does make the S&P 500's rally and break above its highs of last May at little suspect!
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