Below is an updated Daily chartgrid, about which I wrote in my post of December 20th:

http://strawberryblondesmarketsummary.blogspot.com/2011/12/markets-sample-christmas-pudding-early.html

In a nutshell, the ES (S&P 500 e-mini futures index) is high-basing after its big rally that day…a sign of distribution on lower volumes, potentially, in preparation for a push higher. There is considerable resistance overhead, however, but with the VIX trading below 25.00 now, that may be a higher probability than in recent months. Of note, however, is the fact that the U.S. $ is still trading near its highest levels since equities fell in July of this year…something to watch and see if the $ continues to rally, particularly under the scenario that I've described in my last post:

http://strawberryblondesmarketsummary.blogspot.com/2011/12/currency-wars-about-to-begin.html

The first graph below (courtesy of www.forexfactory.com) shows a drop in the CB Leading Index…yet another indicator which shows a softening of economic conditions relating to employment, production, new orders, consumer confidence, housing, stock market prices, money supply, and interest rate spreads. The second graph shows a drop in the Home Price Index, which is a leading indicator of the housing industry's health.

Perhaps these are saying that the markets are overvalued at their current levels…time will tell.

http://strawberryblondesmarketsummary.blogspot.com/

The stock markets are on auto pilot. They are grinding higher despite all the doubts and walls of worry. But that is the plan for the next nine days. There may be a small correction in between just to shake out the weak hands and correct the overbought conditions but the ship is on course. So let’s talk today about something else. ”Gold”.

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Data released (quarterly) pre-market today shows that Britain's Current Account dropped to the lowest level since the December 2007 release, as shown on the graph below (courtesy of www.forexfactory.com). 

Since it's directly linked to currency demand, I've put up the following three Forex charts. The first is a Weekly chart of GBP/USD. The British Pound has been dropping against the U.S. $ since November 2007. It's currently trading in the lower one-third of the Fibonacci retracement…below resistance at 1.58 and above support at 1.54…below both the 50 and 200 smas…and below the 5-Year TPO Profile POC (red horizontal line), which is roughly in line with the 200 sma.

The second is a Weekly chart of EUR/GBP. The Euro has been dropping against the Pound since December 2008. It's currently trading in the middle one-third of the Fibonacci retracement (taken during the same time period as the first chart)…below resistance at 0.86 and above support at 0.83…below both the 50 and 200 smas…and below the 5-Year TPO Profile POC, which is just above the 50 sma.

The third is a Weekly chart of EUR/USD. the Euro has been dropping against the U.S. $ since July 2008. It's currently trading in the lower one-third of the Fibonacci retracement…immediately below trendline resistance at 1.306ish and above support at 1.3…below both the 50 and 200 smas…and below the 5-Year TPO Profile POC.

Since the flow began out of the Pound and into the U.S. $ during 2008, the Pound has firmed in the lower one-third zone and is attempting to hold above major support. Since 2009, the Euro has been dropping against the Pound and is attempting to hold above major support. Since July 2008, the Euro has been dropping against the U.S. $ and is attempting to hold above major support. It would appear that currency wars will now begin in earnest…with the U.S. $ as the potential victor, overall, for the next year, or so…ones I'll be watching, as mentioned in my previous post on December 14th: http://strawberryblondesmarketsummary.blogspot.com/2011/12/us-vs-british-pound-sterling.html

http://strawberryblondesmarketsummary.blogspot.com/