The Dow’s bullish channel from the 9 October lows saw the price action top out at the upper side of the channel at the end of the year. The index neared the 16,600 level before falling back and finding the going a little tough at 16,520. No daily close has occurred above this level since New Year’s Eve.
The indecisive dojis that became apparent on 9-10 January have been treated with a degree of caution, and we have seen a triple-digit decline to current levels. The downside halted at this point at 16,240.
We also noted that the VIX fell some 5.8%. This is the lowest close on the volatility index since early August.
Today sees the release of US retail sales data. Given the US consumer’s importance to the economy, and the fact that fundamentals seem to be of greater significance than Federal Reserve liquidity this year, any failure to meet expectations could precipitate a return to the channel’s rising support around 16,170/80. This raises the question of whether a marginal uplift in the safe-haven trade might result.