Click on Chart to EnlargeThe chart above is EUO which is a 2x US $ dollar bull fund. The rationale for this trade can be found in prior videos and charts on the US $.
In this particular case, I have considered making a new attempt at an inverse trade on the stock indexes, but as shown in recent posts, I don't know if the timing is right. However, the yesterday DIA, QQQQ, and IWM all showed dojis, and SPY showed 2 long upper shadows in a row. Coupled with extremely bullish sentiment and bearish divergence among many technicals, the market could be topping any day.
In past market downturns over the last year or so, the dollar has often started higher even as stocks were still making higher highs. Along with the VERY extreme bearish sentiment on the dollar and a pretty clean pattern with bullish technical divergence, I think even if the market continues higher, the dollar may be starting higher. Also note the short term reverse head and shoulders type pattern that may be forming on this 60 min chart.
New Trade Action:
Buy EUO with a market order today 8/26/09. The current price is 19.13 which will be the blog entry price. Place a GTC sell stop at 18.70 immediately after entry.
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