I know I said in my last post that the markets will take a few days to figure out where they want to go. Well as of now Feb 12, it's still trying to decide what to do. But I certainly think in the very short term, (next 1-3 days), the market is going to rally because the US dollar (UUP) appears to have made a double top, and is ready to pullback a bit. That would mean that stocks, and commodities will rally. Especially when you see Friday's trading action, the market rallied from significant lows to just about break even, so certainly the market is not ready to die yet.
But my forecast last week remains the same, looking at the charts in the next 1-3 days, I believe the SPY will make it 110-111, GLD will make it to 109 and change. What happens after that is debatable and will again depend on price action. But if you look at the chart of UUP, and the SPY, I have outlined two scenarios, with the red hand drawn arrows. One is where the dollar continues to rally (UUP 24) and that would likely the SPY to correct back to 100-102. And the other scenario is that the dollar just starts to die and the markets will continue to party as if all the financial mess in Wall St. Greece, Europe, or heck the US gov't is non existant. Which one will it be?
Again while a correction back to SPY 100 would be significant, I don't believe that the market is ready to die just yet. We need to have a blowoff rally to suck everyone's hopes in before someone realizes that printed money is worth less than toilet paper (hey at least you can use toilet paper for something useful :P ), and that is when financial armegeddon will occur. Or maybe I'm just too pessimistic and that the model of printed money can continue forever???
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