SPX broke through the 1100 resistance over the last week. Over the weekend the Chinese announced their inclination to allow the Yuan to appreciate. Markets propped up +120pts at the open only to lose steam at the end. Some reports suggest that initial enthusiasm waned at the realization that the appreciation would be over a long term not quick (Economists have claimed that the Yuan should be 25 - 30% stronger vs USD)
Technically speaking it was interesting, as the market opened up above the 50% retracement line which was a good sign that it would carry the rally higher towards the 61.8% level (which is much higher at 1225) or atleast to the Jan peak in the near term. The view is supported by the golden cross on the hourly view, as the SMA(50) crosses the SMA(200) from below at about 1100. Also the SPX closed at the support line which might provide some support for an upward move tomorrow. On the daily the current level is below the SMA(50) so there is some room for moving higher. What happens we shall find out.
While my view is that the rally shall continue some more, a reversal from the 50% retracement (or close) as we see today might spell the end of the current rally, if the bears take us lower it shall be in size as I've commented earlier.
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