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As we suspected a few days ago, the US dollar index has broken through a key area of resistance against the 6 major currencies. The 80 level is broken.
Next area of resistance for the rally to be sustained is the 81 to 82 range. If this area is broken, we could see 86 or higher.
This would be quite bearish for commodities over the short run including crude oil, gold and copper.
VIX has sent us a clear message.
Volatility has returned to the stock market with vengeance.
The 200 day moving average is broken on this weekly chart and the 50 day MA is being tested.
If the 50 day MA is broken, we could see a rapid sell off in stocks.
If it holds, perhaps the market will just slowly grind lower.
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