Hard to to discern the cause of the increase in chop in U.S. equities.  Cyprus?  Overbought? Earnings worry?  Strong dollar’s impact on earnings (see Oracle’s release)?

Here’s what we said on March 4th:

No doubt the stronger dollar will be headwind for profits, but earnings season is a month out.

Here’s what Oracle said on their earnings call yesterday:

Now to the numbers in Q3. Currency movements reduced new license revenue growth by 2%, and total revenues by 1%, and net income by 2% and earnings per share by approximately $0.01.

We don’t know the exact cause of the air pocket but probably a combo of all the above.

Nevertheless, we’re watching the 21-day EMA on the SPY like a hawk.   It had a nice bounce off this level today and now becomes the line in the sand.

(click here if chart is not observable)