Gone Camping

The critical levels for the immediate bearish case are 10302.37 for the Dow, 1096.99 for the SP500, and 44.09 for the Qs. If these levels are exceeded then the rally is likely to continue or at least move sideways for a few more days.

One reason to suspect that the rally will not continue is the action in the dollar and the euro in particular. The euro looks ready to roll over to retest its November low, which should correspond to a rally in the dollar, which should in turn lead to a decline in US stocks, since the seemingly eternal inverse correlation between the dollar and stocks is still in force. However, at the moment I do not see a major rally in the picture for the dollar. I expect the dollar decline to resume once this little upward correction ends. Traders should not become complacent about the inverse correlation to the dollar. It will end at some point.

While at the moment I feel a little like a teenager standing over in the corner all alone at the dance, there is nothing that says that we have to participate in every market swing. Let's see how things pan out next week assuming I survive the weekend.