Last week the Greenback exploded higher and in terms of the technical picture was able to take out a blind spot just above the prior low from 12/12/12 at the Fed window which got no traction. When there’s a low what you need to establish is whether the bears cover because if they don’t, if you don’t see good bullish spike candles the low is likely to fail. But as you see from this chart the next challenge to that sequence was on December 28 which failed. This time bulls pushed through to the next level which ought to be very tough resistance. I’d look for backing and filling this week which should be helpful to the stock market which may enable equity markets to get even more euphoric. Once the laughing gas hits it’s hard to let it go. Always remember that hope dies slowly but fear drops like a rock. Right now we are in the hope phase. At this point I’m not sure what we are hoping for but it hasn’t died yet.
Okay, last week I said there was the opportunity for one politician to become a hero. I’ve taken shots at the GOP but oddly enough I don’t think this deal gets done if it weren’t for Mitch McConnell who for whatever reason was instrumental in setting the example and developing the momentum. He was instrumental in getting GOP Senators on board and if you remember the final strokes of this deal came about when the House GOP failed to include a new amendment that would have sent the deal back to the Senate.
So here we are challenging the high in the SPX. Even in the best of conditions double tops are tough to beat so I think somewhere along the line we get some backing and filling. Look for a really important test of the SPX high to be the theme of the week.