There has been a constant theme throughout the summer "rally". The rally would begin with a drop in the dollar, sending oil and commodities up. This caused stocks in those sectors to rise, and then the whole market followed. Here we are again, the dollar has taken a beating, oil has climbed above 70 again, now the rest of the market has followed.
This chart shows this trend of the summer rallies. Follow the white lines, it shows when oil starts to decline, a few days later the market declines.
Oil is nearing a resistance level at 73.
XLF is at resistance and if it breaks 14.50 it should move higher.
USD- Still sucking and has support in the 76 area.
So based on basic support and resistance, the market still has some room to run. Oil is still not at resistance and the dollar is far from bottoming. Watch financial's the next few days, they should break out. 14.50 is a key level for XLF.
Of course history doesn't have to repeat it's self and the market can do what it wants. But watch these sectors for clues.
