A Sea of Red and a USD Doji

Very interesting day in the market on Monday. One of the most interesting things was that Oil moved down AND the main indexes ended the day lower. The following screen from http://finviz.com highlights this extremely well. The typical inverse relationship between the two sectors did not take place and anyone short equities AND commodities would have had an excellent day. Whether this is a one off or not will be an interesting and key development.

As for the main indexes, both the S&P and the Dow Jones either broke or just ended up on the very bottom line of the bearish wedges they had both formed. I personally feel volume was lacking to confirm the breakout and that today will be a decisive day. If the economic data (housing starts, producer price index) that comes out before the market opens is very bad, we may see this pattern destroyed completely. I think it's fair to call today do or die time (at least in the short term) for the bulls.

Another interesting thing I noticed was on the USD index. The following is the daily chart (as always click on the graph for a closer look):

Here we can see a long legged doji at the top of this trend (its almost a dragon fly doji). Given that this happened at resistance (we're at the 20 month moving average) and near the edge of a bollinger band (purple lines), this could signify a pause in the recent rapid rise of the USD.

If that were to happen, with the USD taking a break for a while, that could be bullish for commoodities. With oil and gold already at major long term support, I don't think would be a big surprise to many. Perhaps the big question would be what would happen to the broader indexes of the S&P and Dow if that were to happen. Would they move in tandem with commodities as they did last night, or fall to their default and expected behaviour of trading inversely - thereby beginning a new down leg?

All interesting questions no doubt - none of which anyone can provide certain answers for - we'll just have to wait and see!