FXY vs. S&P 500

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Source: BigCharts.com

The red circles show points where the FXY made a high and the S&P made a low. The blue circles show points where the FXY made a low and the S&P made a high. This tells us that the dollar is quite important here. Unless, of course, the relationship that has been in place for the past year is about to change.

FXY vs. GLD

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Source: BigCharts.com

And have you noticed how quickly everyone has turned from bull to bear on gold? I suppose that goes hand in hand with their newfound bullishness on the buck.

On Monday, I showed how interest rates were up against resistance. Stocks were hitting resistance. Gold was coming down to support, and the dollar vs. the yen was hitting resistance while the dollar vs. the euro was coming down to support. Each of these financial instruments stopped exactly where they should have, and they did so right as the market reached an overbought reading.

At some point, these ranges will break out and we will have a new trend, but for now, what has been in place for almost a year continues to be in place.

One of the other indicators that I'd like to discuss is the number of stocks making new highs. It was only a minor higher high in the S&P yesterday vs. last week, but even when we were up and the skies were sunny and bright, there were still only 53 stocks making new highs on the NYSE.

Now, before everyone writes to tell me about group rotation causing this, let me point out that by Monday of this week we had already seen the commodity names faltering; even then, though, there were 90 stocks making new highs (vs. the peak reading of 156 on April 18). To have only 53 stocks making new highs yesterday on a higher high in the S&P was still not impressive, rotation or no.

Over on Nasdaq we had a peak reading of 49 stocks making new highs back on April 18; yesterday we had 32. We had 43 on Monday. This is not the right direction for this indicator.

Finally, on the sentiment front, yesterday morning I presented the chart of the shockingly high ISE equity call/put ratio as well as some of the moving average charts from the CBOE's put/call data. Today, I'd like to show you the American Association of Individual Investors charts.

The bulls are now at 53.29%, and the bears are now at 26.32%, both in the same place they were in early October, just before the market made a high. That does not sound like a "wall of worry" to me.

While today is the first day of the new month and we have the potential for a seasonality-effect rally, I would remind folks that the market is still moderately overbought, which keeps me in the correction camp.

Overbought/Oversold Oscillators

For more explanation of these indicators, check out The Chartist's primer.