The Apocalyptic Year Begins

We kick off 2012 with a rally, and looking at the new monthly pivot points, it wasn't that much of a mystery. I have drawn the support and resistance lines right on the pivots, and as you can see we started the day just above the middle pivot, meaning the most likely direction to go was up. The former resistance at 1267 was no longer resistance today, and it looks like pretty clear sailing to 1307. After that I strongly suspect we will come back down to test the middle pivot.

Crude oil also rallied off a pivot point and is poised for a breakout. Among the items holding this up: Iran has "warned" the US about sending an aircraft carrier into the Persian Gulf. They must not have been paying attention the last time someone warned us about an aircraft carrier: Ghaddafi and the "line of death". Trouble was, it was Ghaddafi's pilots who got whacked. The threat may not have been the cause of today's rise (the falling dollar was most likely behind it), but it does have a lot to do with crude's relative strength lately.

Gold also had a nice rally today, but this is still trying to build a base and will likely have problems with the 200dma. If the last 10 years or so, this base will last months, and will result in another big move up.

The most remarkable thing about the yield on the 10 year treasury is that it has been doing a whole lot of nothing for months now. Yes, it made a nice gap up today, but in the broader context this has been stuck in a narrow range for months. That could well mean it is grinding out a bottom, and at some point will begin a big move up, assuming that Bernanke does not, or can not, intervene.

The dollar did drop big today, but the UUP chart, which looks quite bearish, while the dollar index lloks quite bullish, without today's candle. I will take a look at it later (or tomorrow) to see how far it dropped today, but I suspect the trend is still up.

I suspected we would get a rally early in the month, and also suspected it would be weak, and so far, that has shown to be true. Most of the leading stocks were down today, most breakouts reverse and failed, and most of the advancing stocks were stocks that previously got creamed. Unless that changes, this rally won't last long.

I will have the new highs update shortly.