Today's rally, and that of the prior sessions in the current bullish move, has come on very low volume. While volume alone is far from sufficient to make a call one way or another, it is sufficient to raise questions about the viability of the rally. Together with a host of other technical and sentiment factors, it's enough for me to stay out of the market and watch closely for a potential sharp intraday or next day reversal.
We have already seen gold, silver, copper and crude oil back off considerably from their highs in spite of the single biggest recent selloff in the dollar.
Picking a top is bad trading, so don't do it. Do, however, be prepared to follow up on a sharp reversal on volume should it materialize.
This may also mark a mini-panic selloff bottom in the dollar as well. A sharp reversal to the upside would constitute a strong buy signal.
Then again, the markets may rally to new highs and the dollar plunge to new lows in the next week. But it is far from certain in my view.
This is a good time to be on the sidelines waiting for the market to give a strong signal one way or another. I am not buying this action as a strong signal to get long stocks and short the dollar.