Weekly Commentary- Positioning for 2010-Pt 2

The DJIA has completed it bearish wedge on Friday...the upper end of the range being 10620. As stated earlier, I expect one last push above this trend line,(this would also coincide with the normal Monday Market Levitation), followed by a sharp reversal. 10650 would suffice for Monday. A weekly close of 10340 or below confirms the break of the uptrend since March. For the S&P500 1110. One way to play the downside in the S&P500 is (RSW). It has a double inverse correlation to the S&P500, meaning if the S&P drops 10% RSW goes up 20%. If the markets break, RSW should close at or above $58 on a weekly close. One reason to look at weekly closing prices is that it helps filter out the intraday and daily noise of the markets. Gold has had its monthly reversal...every time gold has had a monthly reversal since the bull market in gold began in 1999, it has had a significant decline. Target remains below $800/oz. The US dollar index is looking to confirm its base, which should be accomplished this week. Whether that base takes the form of a retest of 76's or a push toward 80 will be settled this week. Either way it amounts to small potatoes...as this is the beginning of at least a one year bull market in the dollar, the near-term target remains 90. As for the EUR/USD, upside could see 1.47. A break below 1.4250 will confirm the completion of the euro's retracement, signaling further weakness in the months ahead. There are many tempting opportunities abroad, however the risks/reward at this time do not warrant dabbling until a readjustment has taken place. The best way to play the market is never make any trade that will not let you sleep. There will always be opportunities... wait for the guaranteed trade...you do not have to be invested 100% of the time. The outcome of this week will prove to be very interesting. All markets and assumptions of scenarios are confirmed by one another...therefore all current scenarios remain in place. -Dio