After a mind numbing rise in the stock market so far in 2013, this week marks the first significant pause.
As you can see from the trend lines on the chart, the SP 500 cracked below the trend line that guided the rally this year.
Now that supportive uptrend line has become the resistance hanging over the bulls run higher. In the area around 1,500 the bulls have another trend line.
If that level fails, then we'd likely the bears take prices down to test the 1,470 to 1,450 area. What should potentially concern the bulls is that the DOW made new highs above the 2008 nosebleed heights, but that only represents 30 stocks.
The S&P 500 is a much broader measure and failed to take out the equivalent price levels. The good news for swing traders is that we're in for some interesting moves in the next few weeks.
The Dollar broke through the resistance area set late last year and is now likely headed up to test the highs set in the last two years.
Similarly, the 30 Year Treasury Bond broke through and is on high volume rally as you can see in the weekly chart below. With money flowing in to 'safe' treasuries, that's going to add fuel to the bears in the stock market.
And in the Gold market we've tested the lows on that I expected and it looks like buyers have stopped the slide for now. Unless we take out the lows here I'd expect a rally to test the 1,630 area as Gold sorts out which way it's going next.
That's the highlights for this week. Stay tuned because the coming few weeks ought to be interesting.
Good Investing!
David K. Miller
Managing Editor, Absolute Wealth
