S&P and Dow Sit on Active Support

But will it bounce or fail?

Technical Edge — 

• NYSE Breadth: 16% Upside Volume (!)

• Advance/Decline: 21% Advance 

• VIX: ~$22

We took yesterday slow, with an attempt to buy the dip as the S&P pulled back into active support via the 10-day moving average. That measure was enough to halt the index’s decline on Monday, but now we’ll see who takes control. 

If the bulls cough up the ball, we could be looking at ES 3920 and SPY $390. However, if bulls remain in charge, we should see a bounce today. 

The dollar is back under pressure, but faces a key level too (charted below).  

Dollar — DXY

The goal for the DXY and the short-dollar trade was to exit the rest at the 200-day moving average. That worked wonderfully and now we see if the bounce is short-lived into active resistance or if the dollar stages a larger rebound. 

If the latter, that does not bode well for equities. As for equities, let's look at the indices:

S&P 500 — ES