In early premarket action both the NASDAQ and the DJIA are up 1%, the S&P 1,1%.
The new trend is your new friend.
Until it turns on you.
First up, the WSJ Europe's The Source blog:
Having risen for much of the old year’s second half, the correlation between stocks and the euro ended with a flourish.And from Slope of Hope:
The 60-day correlation between the S&P 500 index and the EUR/USD pair came close to 0.9 in December; its highest since the launch of the euro. Those not obsessed with cross-market correlations might want to bear in mind that a score of 1.0 indicates absolute lock step between the two assets in question.
However, it seems that 2012 has opened with a big change.
Lock step be damned. The S&P has crept higher, buoyed up by hopes of growing economic strength in the U.S.
The single currency, meanwhile, fell to a 16-month low against an all-conquering dollar on Monday.
However, while signs of a correlation breakdown are clear, there is still room for caution. The 60-day has so far only fallen to a shade below 0.8, while the 30-day has fallen to 0.79. They are both below the record peaks of December, but they remain extremely high.
Brown Brothers Harriman’s global head of currency strategy, Marc Chandler, who back in December argued that a weakening in the 30-day correlation might just herald a more general retreat said it was far too early to get excited, even if the numbers are proving him right so far....MORE
Very Clean Breakout
After the close yesterday, it occurred to me that a very clean breakout was forming, and that a break above 1283 on the ES would be awfully bullish. Based on that, as I mentioned in the comments section yesterday afternoon, I took on a very large SPY long position.
Well, it's the wee hours of the morning, and I decided to check the markets. Sure enough, even though the Euro isn't doing much of anything, the ES and NQ are up strong. I can't believe I'm typing this, but this could set the S&P up for a journey to 1424 or so.