$ INDEX WEEKLY

$ INDEX weekly
The rise in equities market recently have been a function of massive liquidity which has been reflected the drop in the $ index. By now it must be know to most of the people that $ index and equity markets are conversely related, and hence it is important to understand where the $ index will head next. Please see previous post on 17 november about $ index
Now lets see the weekly chart of $ index
It appears as if some sort of bottoming out may be happening in the $ index , on the weekly the index has been showing a good +ve divergence on the PPO and MACD and it has been going on for a pretty long while going forward two things can happen
1> The +ve divergence will play out and the index will burst upwards of 76-77 to give a break out which will result in a correction in the equity markets.
2> The +ve divergence will fail resulting in divergence failure and the index will go below 74.50 and will result in fresh impetus for equity markets
IMPORTANT price point for $ index
The index has been facing a lot of resistance at its 10 week moving average which at the moment is at 76.20 and a close above it will set it up for a target of 77
77 is the resistance presented by the Bollinger band average an is a important resistance.
74.50 is an important support in the index which is marked by two circles
10500 is a key confluence resistance on the DOW JONES and expect some heavy selling pressure as DOW approaches this mark.
So as long as 74.50 and 10500 is held by $ index and DOW it would be better to avoid deploying fresh cash in equities.
If $ index closes above 76-77-78 sequentially better thing would be to start taking profit off from the tables in equities as a move above 78 would set up $ index for a vicious short covering as wll as long trades.