IT'S ALL ABOUT THE DOLLAR

The market will not drop until the dollar starts to rise. As long as the dollar keeps dropping, commodities and the equity markets will continue to rise. How close are we to a dollar rally? If you ask the masses on Wall Street, they will say "Not any time soon". However...if you look at the sentiment indicators, it could be any day. The investment advisers that are bullish on the dollar stands at only 3%. That's 97% that are bearish. The Investors Intelligence survey has never seen a reading below 3%. On the other hand there are 97% bulls on the Euro, 98% bulls in gold, 97% bulls in silver, and 98% bulls in Treasuries. Approximately 93% of stocks are above their 50 day MA. The equity market readings this week are 47.2% bulls and 24.7% bears (I apologize for the error I made in my classes today...I think I said there were 98% bulls in the equity markets as well. Can you blame me?....there are a lot of 98% in those other surveys). This means that we could still get a bit more of a move upward. The markets are extremely overbought and any rally in the dollar would definitely spark a sell off. You can follow the movement of the dollar by looking at the UUP. The dollar also looks to be in the "C" wave of a bullish ABC pattern....much like the market looks to be in the "C" wave of a bearish ABC pattern. The financials are very weak right now with the foreclosure news. I currently have Bear Put Spreads on JPM, WFC, and AXP. I am also very bearish on the "for profit" educational stocks. I have a Bear Put Spread on APOL. I think INTC will continue to head lower in the near term. GOOG will have a big gap up tomorrow at the open following their good earnings report. If they sell off like INTC did back in July following their blowout earnings report, look for a potential put option play. You would want to see it sell off right after it gaps up. You would also want to see very high volume. I'll try to make an intraday comment on the blog if I see a high probability trade. There is an old Wall Street phrase that says "Don't fight the Fed". I've done a bit too much of that over the last few weeks. Lighten up on the trades (bullish or bearish) and use spreads if you've had Course 2.