The story of the day was the action in the S&P 500. A morning rally which sent the index solidly higher was later rejected by the 65DMA... sort of. The SPX actually closed marginally back above the 65DMA. However, regular readers are familiar with my cynical view about slicing hairs when it comes to pivot violations, including my beloved 65DMA. When differences are this small, there is no solid information to be gathered. Besides, on the initial assault of the moving average last week, price was halted about 4 handles above the MA, so I'm not going to go declaring a definitive end to the correction just because we closed a handle and change north. If the SPX had decisively regained the 65DMA, I would be postulating a re-test of the high. If price had closed definitively below, I would be declaring an acceleration of the move. As is, I stand cautiously confused. Further strength from here will put a re-test in play, but if we break lower from the get-go tomorrow, look out below.
Likewise, the buck re-tested the DX 76 breakout for the 4th time in 5 days. If I were a dollar bull... and remember I am pitching the idea of a countertrend rally here... I would be quite nervous about so many tests.
In any case, as long as we are still above the pivot, I'm working under the assumption the dollar rally is on. All the same, I significantly reduced my short line today.
If gold has anything to say about all this mess, there will be no significant dollar rally, and probably no major correction in stocks. The metal is within a whisper of its all-time high. That's just so much more ground mining shares have to make up when the next equity rally hits.