EUO Trade Stopped Out and New Trade Set-Up

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The chart above is the daily chart of the S&P 500. I have made notes showing a trade set-up that will be triggered if price closes back below 1100 without significant further upside. It is a similar set-up to the one during the June high. Check the chart for the notes. In sum though, I do feel it is worth it to get back in on the short/inverse side of this market if there is another close below 1100 in the next few days. Then the stop will be the most recent high in the market.

The EUO trade was stopped out at 16.95 (down from 17.43 at entry) on the open today as the dollar index gapped down. Thus far all my attempts to catch a significant reversal on this index have failed. However, there is an identical (but upside down) set up on this index as in the S&P, so this puke gap down in the dollar index today may be the last one before a legit advance. I don't know if a lot of detail is necessary on this, but the dollar and stock indexes have had a strong inverse correlation recently. It has not always been so historically, and major turns over the last year or so have tended to see some breakdown of the correlation between the two. So that is something I have been anticipating may happen, and is my justification for making trades both long the dollar and inverse stocks. However, there really has been no point in retrospect - the correlation has been extremely high and not broken yet. So, until I see more definite signs of a reversal, I will probably only be playing one or the other.

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This is an hourly chart of SPY showing a continuing bearish divergence on the MACD on the recent new high. The ADX system is showing no trend, but bulls in control right now. These are still the indicators I am watching, but basically another close back below 1100 on the S&P will be the sign to get back in an inverse ETF.