Archived IMT (2009.12.28)

S&P500 finally closed well above the crucial 1120 level, which marks the 50% retracement of the decline from the Oct 2007 high to the Mar 2009 low. Long acting as an important parameter for risk appetite, 1120 may pave the way for further gains in equities. But how far can equities rise with prolonged advances in the US dollar? Or, will the inverse relationship reassert itself? Traders may not simplify the question without adding more variables, such as the individual currencies against which the US dollar will be determined. Only in the last week of January will markets return to full normalcy. Figuring out the time element of these dynamics makes accounts for more than half of the challenge, especialy for leveraged FX traders. We will tackle these issues throughout the year.