The dollar remains the most important chart to watch in our opinion and while it too seems to have binary-move potential it will most likely dictate the way the rest of the risk assets go.
On the daily chart looking back three years we see a higher low accomplished earlier this year and now some resistance at the downtrend line. These aren't hard and fast levels, just zones to watch. A break of the dollar index above 80 should cause risk assets including equities to feel renewed pressure. That might be a few weeks or even a couple of months away.
Tomorrow Ms. Merkel will be giving her speech and in the U.S. we have the November non-farm payroll data- – its a big day tomorrow and the market is acting like it wants to just wait to see what tomorow brings. A strong payroll number tomorrow may be dollar positive and equity negative.
In terms of trading we are holding our small bucket 2 small positin in SPY from yesterday and will keep it into tomorrow.
We have not opened an initial and small bucket 3 long position in OIH (please see blog post from earlier today) but may do so tomorrow or next week.