For the last little while, the markets rally when the USD gets crushed and vice versa. Today the USD got absolutely crushed, and likewise the market rallied. But for the USD to suffer such a massive decline, with oil rallying and gold rallying, the performance of the SPY was relatively unimpressive. Furthermore, volume on the SPY is one of the lightest this year.
Taking a look at the UUP, it looks like the UUP is trading around the lower trendline (red) support. If the dollar does rally off of this lower trendline, then it will likely mean some sort of correction in the stock markets given the inverse relationship of the markets versus the dollar. Keep also in mind that gold has kissed the $1k mark, and the markets have gapped up to another major resistance point.
Chances are that we're more likely to see a correction (in everything) than continued upside at least for the short term, if the dollar rallies so being defensive would be prudent.
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