I continue to maintain my view that we are at a Market Top and I continue to hold my Short Position of SPY. When will the sell-off happen exactly? I do not know. What will it take for us to decline? Well, that is pretty simple, the dollar needs to find a bottom and the world needs to stop selling it off. Hopefully Bernanke's comments that the US is taking action to preserve strength in the dollar have some worth, and hopefully the trading community will buy into that statement. Regardless, the dollar still has more room to decline. Looking at the dollar index, you can still see that there is a ways to go yet before it reaches the low of $70.70 that was seen in 2008. So, the question is, will we see the dollar rebound now, or will it continue down to form a double bottom at $70.70.
I have a tentative target to Cover my Shorts if SPY closes above $111.80 this week on a daily chart. We really are getting closer to having to admit jumping the gun on shorting the market. The fact that we closed above $110.34 yesterday was a very bad sign. Today will make it two straight days above $110.34. But, we have not given in just yet. We'll see what happens as this week plays out.
On the other hand, if we do get some downward momentum in the coming days and SPY moves below $107.16, I will add to my Shorts position as this should confirm a further downward move with a potential target around the $104 level.
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