So forget Egypt I guess.  Forget any issues that briefly arise.  In fact, just look at them as the only chance you will get to get in on the next wave higher.  We’re up 44 points on the ES in 2 days.  No problem.

As I said last night, it was a possibility and almost expected at this point.  Very little makes sense right now, but I will attempt to simplify this as best I can – it’s the dollar – dummy.

The dollar, as the esteemed Joe Donahue from Upside Trader pointed out today, is on a glidepath of an anvil.  Dollar declines are only offset by rises in real assets, and stocks and commodities are those real assets.  The opposite of the dollar, the Euro, has now shot to the moon and looks like it is on a path to capture old highs near 1.42.

So when does the bottom in the dollar come?  Not sure, but it’s got a nifty target using pivot points and prior lows as our guide.  Monthly S2 is 75 and the pivots in March could really drop if we in fact do trade to that target.  Plus, we are nearing the stage where the 3-year cycle in stocks will/should come to an end – Spring of ’11.

So, barring major uncertainty such as war, terrorist attacks, etc. we should recognize the long-term, intermediate-term and short-term bias is higher.  It’s possible we see 1,400 on the ES by the time the dollar has bottomed and the cycles have played out this Spring.

So, today I started some position trades in GDXJ, EXK, SIL and AGQ.  Why?  Of all the commodities that should be reacting positively to low dollar, the metals have actually been weak.  Silver has now broken it’s short-term down trend as of today, and the miners looked strong today as well – which is usually an early sign that health in gold and silver should be coming soon.

I am content to weather the storm, if there is one, down below 1,300 on gold.  In fact it’d be great to add the final pieces to this position trade if it did.

Step back, take a deep breath and play ’em as they lie.  It’s all we can do and I’m now in full dollar reference mode until major changes present themselves.

Trade the extremes and trade ’em well.


About thefront9

Independent trader with a flexible approach to the markets. Position trading, swing trading and day trading using Futures, Equities and Options. This site is intended to help others (and myself) see what I see and to stay true to the discipline of making trades at the extremes. Contrarian and TastyTrade addict! Living in Texas with my family, helping others and maybe playing some golf from time to time makes life busy and great. Add a little music and humor and that just about sums it up. Trade the extremes and manage risk.....always!
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