Two Different Markets Yesterday

We saw two very different markets yesterday traders. The trading was very good for the first half of the session, but things really fell apart in the afternoon. The markets started with a gap up open, but basically went sideways for about an hour and a half. They broke out around 11:00, rose quickly, and then moved sideways again through lunch. A spike in the dollar around 1:30 caused the market to drop hard from there, as all bounce attempts failed and stocks finished at their lows for the day. Volume looks like it will be lighter all around for the end of the week.

For us, the biggest worry the bulls is still the inverse correlation between the market and the dollar. Recently the dollar looks quite strong and although it’s overextended in the short-term, it certainly looks like it wants to go higher over the intermediate and longer-term time frames. I haven’t gone through my scans fully yet today, but the reversal today put a lot of ugly bars on a lot of charts we look at. We’ll see if it means anything tomorrow and the next day, buy hey, we have to take things one day at a time around here.