Source: U.S. Energy Information Agency; NOAA
Trend line support has held this week for the USDX and trading has turned higher this AM for the USD. A cross of the 50 SMA above the 200 SMA will be viewed as a confirmation of a reversal of the broad bear trend in the dollar for technical driven traders specifically and for dollar market sentiment generally. Risk is for increased support for the upside, indicating downside risk for equities and commodities.
USDX 
S&P 500This week we step back even further than we did last week to report on weekly price activity. A look at the 200 day moving averages of some of the primary market indices gives a broad perspective on current trading sentiment relative to predominate trend. Needless to say, global markets have been on an impressive bull run since Mar of last year, however, the bearish volatility since the beginning of 2010 and particularly that seen last week, suggests there may be a significant test of the bull trend. Many of the indices above printed values to or through their 200 day MAs on Friday. The question is: will these levels provide support and represent a buying opportunity for the bull side, or will bears force the momentum that has dominated trade so far this year. I imagine the trading algorithms will be particularly "jumpy" in the trading sessions ahead as the two sides of the market test each other for direction.
A bearish caveat is the strength in the USD. The USDX is trading well above it's 200 SMA - and a crossover of the 50 SMA above the 200 appears imminent given the current spot price trend. A crossover above is considered a strong buy signal, suggesting follow-through upside may result near-term. The rise in the dollar represents downside risk for commodities and equities as market participants trade into the dollar as safe haven from perceived riskier positions. Perceived risk is also on the rise, as the VIX has settled above it's 200 SMA for the second time this year. Of course, all the current known global economic issues will determine sentiment... and at the moment, markets are at a critical crossroads. Many analysts suggest the downside from here could be significant - but, the 200 day MA could represent a launching pad for a retest of recent highs.
So, to the question: will markets go higher from here, or lower? The answer is... yes.
Feb. 4 (Globe & Mail/Reuters) Royal Dutch Shell PLC RDS.A-N said it plans even deeper cuts to its oil refining and retail operations after downstream weakness caused a 75 per cent fall in fourth-quarter profits to $1.18-billion (U.S.).
Daily Continuation
The Henry Hub front month futures contract traded down ~0.10 on the slightly lower than forecast EIA stock level. After a short period of sideways choppy trading it continued lower to horizontal support associated with Mon low, from which it traded higher the remainder of the day, to close only slightly lower than Wed's close. In the big picture, natgas is well entrenched in current range trade - with very little regard to the volatility in rest of the energy complex, regional or global economies, equities and foreign exchange markets. Expect prices to range within the declining channel, with downside trend being the dominate skew.
Daily Continuation
Mon's WTI price activity was lead by heating oil, and then on Tue it was driven by increase in RBOB, both which triggered heavy short covering according to trader commentary. Wed however, prices traded sideways, putting in a bearish long shadow candlestick on a daily basis, implying bull activity ran out of momentum. Price move so far this week has knee-jerked the Percent R oscillator from oversold to overbought. Today's candle stick suggests a pause in rise at a minimum, and a reversal lower is certainly a risk.
Feb. 3 (Bloomberg) -- Italy’s financial police are seizing 73.3 million euros ($102 million) of assets from Bank of America Corp. and a unit of Dexia SA as part of a probe into an alleged derivatives fraud in the region of Apulia.
Feb. 1 (Bloomberg) -- JPMorgan Chase & Co. may drop plans to acquire the North American operations of Sempra Commodities LLP after President Barack Obama said he would seek to curb banks’ proprietary trading activities, two people with knowledge of the matter said.
