Tops Tweet Today: 07/10/2015

As global markets ramp up their assault on bears, the S&P 500 opened up strongly up until the price approached the 2000 mark when it started to experience of hesitancy. It was able to 1999.33 only to turn down and reverse its fortunes. The bulls would be much more comfortable securing the 2000 level which the index has been beneath for a while now.

The glamour of the 6 year bull rally could be felt when the 2000 mark was reached for the first time but it now seems that it could become a thorn in the side. Psychological levels play a key role in determining direction of a market especially when we've seen global markets come off so hard the bulls would definitely need to prove themselves above that level.

The reason for the sudden selloff was probably longs taking some profit off the table considering we've had a great run since Friday but also added that earnings seasons start tomorrow which is going to be watched very closely for signs of fullness or really bleak economic conditions.

As US stocks are about to turn negative, the S&P 500 topped out at 1999.33. Funny things those technical levels. $SPX

— Kevin Kingsbury (@KevinKingsbury) October 7, 2015

I think the level of confidence is evident in the overall market as is seen in the amount of leveraged positions on the S&P 500. Confidence comes with complacency which is probably one of the reasons why we saw such a sharp selloff the last 2 months.

Has leverage peaked? Looks like NYSE borrowed funds took a tumble August as traders felt the $SPX burn pic.twitter.com/IYDFJQuR8v

— John Kicklighter (@JohnKicklighter) October 7, 2015

The Dollar Index clearly set the cat amongst the pigeons last year when it started its ascent to multi year highs on speculation the Fed would lift rates in the coming year of 2015. Fast forward a few months and a Chinese crisis and things don't look as rosy as they once did all that way back.

I believe the index will lead the market forward in the direction it chooses to go and it's clear that from the chart below the price has been flirting with the 200 SMA. What you usually find is when a price touches a 200 SMA in quick succession the power of the up move may be exhausted and the obvious move would be a directionless or a pullback.

We shall see what the market has install for us but judging by the short term weakness in the dollar from Friday, commodities having some of the best days of the year surging on optimism that the end of the world isn't that close.

#USD weakness to persist as rate hike expectations are unwound. $DXY back below 200 day moving average. pic.twitter.com/Np548Iwy3U

— Metric Advisors (@MetricAdvisors) October 2, 2015