STOCKS TRY TO EXTEND REBOUND -- RISING EURO BOOSTS EUROPEAN STOCKS -- FISCAL CLIFF MAY BE DRIVING SOME MONEY TO EUROPE
STOCK INDEXES CLIMB BACK OVER 200-DAY LINES... Chart 1 shows the Dow Industrials climbing back over its 200-day moving average. It still needs to clear its 50-day line and initial chart resistance near 13300 to turn its short-term trend higher. The Dow bounced off chart support along its July lows around the 12500 level. Chart 2 shows yesterday's upside reversal in the S&P 500 taking place above its 200-day line. The 14-day RSI line (top of chart) has risen back above 50 which is a good sign. Its daily MACD lines (below chart) have turned positive as well. The S&P 500 is nearing a test of its (blue) 50-day line. Initial chart resistance that it needs to overcome is at 1434. Chart 3 shows the Nasdaq Composite also back above its (red) 200-day line. It needs to clear its 50-day average and chart resistance near 3025 to strengthen its short-term outlook.
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Chart 1
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Chart 2
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Chart 3
EURO STOCKS RISE ON STRONGER CURRENCY... A stronger Euro is giving a boost to European shares. Chart 4 shows the Euro in the uptrend that started over the summer. Chart 5 shows Europe iShares (IEV) in an uptrend as well. The IEV/SPX ratio (below chart 5) shows European stocks outperforming the US since July when the Euro starting climbing. It's also possible that fear of the fiscal cliff is driving some money out of the US and into Europe.
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Chart 4
