After today's action I'm becoming more of a believer in the scenario I've been stalking for a couple weeks in which the current moves in just about every asset come to a spikey end. These moves should be instigated by a few days of furious selling in the dollar, bringing the 5th wave of its move off the March high to an end. The buck is simply looking too weak to form a countertrend rally without a major shakeout. For the third time in 6 sessions, the dollar index assaulted the 77 level and was rejected.
With a Fed meeting occurring over the next 2 days, the buck will be offered plenty of excuses to do what it wants. The caveat is a possibility I warned about last week: that politicians may be ready to defend the dollar, at least with rhetoric. The FOMC would be the messenger in this case.
The S&P 500 also appears to be forming yet another coil. The initial coil breaks tend to be false moves, so if we get a violent move higher in coming days, the odds would increase that our short squeeze ending scenario is unfolding, especially if it occurs in conjunction with a tumbling dollar.
As for precious metals, a final, sharp sell-off to end this stage of the dollar's decline should put enough distance between $16 and $1000 for silver and gold, respectively, for them to hold those levels during the ensuing consolidation.