Indicies March Higher as the Dollar Declines

I recently examined the NASDAQ trendline in not one but two posts. The downward trendline that began in late '07 was recently breached during the last five days of bullish market irrationality:



The next chart shows the NASDAQ's incredible bullish march since March. A trading channel seems to have developed. With that in mind, here's my textual annotation from the chart:

The NASDAQ could conceivably trade in this channel. The RSI readings are short-term and medium-term overbought. But shorting the market since March has proven very painful. The fundamentals may still suck, and corporate insiders are selling their shares at astronomical ratios, but I think the weakness of the dollar is helping push the indices higher.



So let's take a look at some charts for the almighty dollar:



The bearishly-inclined, like yours truly, believes there is limited upside to the equity markets right now, but the risk is a cheaper dollar will push the indices higher. The dollar's downward move does look a bit overdone in the short-term if you take into account the RSI readings. But the dollar could fall significantly further to levels seen in the first half of '08.