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The governing factor that will beget further immediate term strength in the US stock market, that is...

The US Dollar Index is defying the skeptics (including myself), continuing its rally in the face of an easy money US Federal Reserve. I am data dependent, and respecting this factor above all reasonable doubts. As the facts change, I will.

Today the US Dollar is up another 60 basis points to 77.16, taking its 1 month moon shot rally to +7.3%! This has led to a meltdown in everything commodities related, and provided the impetus for a bullish US stock market "Trade".

The "Trade" higher in the US$ is undeniably bullish, but will run out of momentum at the 77.55 level. I have attached the long term chart. All Bernanke has to do to extend this currency strength above my level, is step up to the plate and raise interest rates.

  • Next level of resistance in the US$ is 77.55
(chart courtesy of stockcharts.com)