I want to take a step back tonight and look at some charts from a ‘big picture’ view.  First, let’s look at the US Dollar versus the S&P500.

The top chart shown is the US Dollar and the bottom chart is the S&P500.  Please notice the blue arrows.  Every time there a new low is made in the US dollar, the S&P500 prints a new high.  This is significant because if the dollar bottoms and rallies, this could end the current stock market rally.

Now, let’s look at the Russell 2000 (small cap) index in relation to the S&P500 (large cap).

Notice how the Russell 2000 (small cap stocks) failed to make a new high in October while the S&P500 (large cap stocks) made new highs in October.  Also, notice how the S&P500 continued on to higher highs (November and December) while the Russell moved sideways.  These are the divergences I have been writing about over the past couple of weeks.

Here are some closing notes from IBD on Friday’s action.

Despite qualifying as a day of accumulation, Friday’s session didn’t show the kind of action that inspires confidence.

For one, the Nasdaq broke through the 2200 level for the fifth time in recent weeks only to be slapped back down once again. On the plus side, though, the Nasdaq hasn’t had much trouble holding its 50-day moving average in recent weeks.

Action among leading stocks was disappointing. A few of the best performers since the market uptrend began in March took hits in heavy trading. Apple (AAPL) slid 2%, losing its 50-day line. Argentina-based e-commerce firm MercadoLibre (MELI) also fell 2%