Market & Dollar Direction

From: Chart of the Day

Despite a host of concerns (weak economy, high unemployment, mounting foreclosures, geopolitical issues, etc.), the Dow made another post-crash high today. While the recent string of new rally highs is significant (especially coming on the heels of a major stock market plunge), it should be noted that the Dow is currently testing resistance (see red line).

Quote of the Day: "Efforts and courage are not enough without purpose and direction."
John F. Kennedy
We remain wary of the current rally.
We note that the US dollar seems to be moving sideways around the 75.0 to 75.5 level on the dollar index.
Stocks seem overbought to us looking at fundamentals 6 to 12 months forward.
The dollar seems oversold based on the rapid decline of the last 7 months.
We agree with Robert Pretcher, Mike Shedlock and Andy Xie that a sharp increase in the dollar is probable in the short term.
It is also our opinion that a sharp correction in the Dow, S & P and TSX, crude oil and Canadian dollar is likely.