Bull, Bid, Buy and Up Goes the Market

Last week saw a follow-through to the upside as the S&P 500 rose 29 points. Ben Bernanke confirmed that easy monetary policy would continue into the foreseeable future giving market participants the go ahead signal to continue buying equities. The dollar continued its trend and made new lows. It looks like the dollar index is headed for $72.

What I am looking for as we trade into the first week of May:
Possible scenario is that the S&P 500 heads up to 1400-1420 while the dollar index moves down below $72. I expect the dollar will likely see a short-term bounce at that point (NOTE: Everybody is looking at the support dating back to the 2008 lows on the $DXY, so expect the unexpected regarding how the dollar will trade as it approaches $72). However it happens, I will be looking for a correction to the down-side in equities to coincide with a rebound in the dollar. Thus, I am bullish equities up to 1400-1420 (on the S&P 500 Cash Index) and bearish on the dollar to $71-$72 ($DXY). I will be looking to play the markets accordingly.


Daily Chart of the Dollar Index. I will be looking for a bounce to the upside after a pierce of the $72 price point on the $DXY



Daily Chart of the S&P 500 Cash Index: I am bullish up to a break above the 1400 price point. I will be looking for a possible correction in equities to coincide with a rebound in the US dollar.

Any correction will likely be a small one as I presume that equities will remain bullish overall through the summer (with dull, low-volume trading).