Here are my thoughts as we head into the final 20 minutes of trading today. First off, my read on the very near-term outlook for the equity markets isn’t clear enough to warrant taking home a sizable position & being exposed to the possibility of getting caught on the wrong side of a large gap (which is certainly a possibility due to the recent spike in volatility). I still favor a little more upside before a resumption of the near-term downtrend but to be safe, I will reduce the long exposure in the QQQ that I recent took to play the expected bounce. Just eying the charts, I could certainly see the possibility of one more thrust down, taking out yesterday’s lows, before putting some positive divergences in place on the intraday charts which would then likely precede a decent tradeable bounce, maybe to backtest the recently broken bearish rising wedges on the QQQ and/or SPY daily charts.

I also continue to believe that the odds favor a resumption in the correction of the $USD and the rally in gold, silver & the mining sector. As mentioned earlier today, the $USD (via the UUP 30 minute chart posted earlier) does have the potential for a little more upside before reaching that downtrend line but the counter-trend bounce that I was looking for has likely ended with the tag of horizontal resistance earlier today. Remember, where the dollar goes is likely to have a direct impact on both equities & precious metals. As with my QQQ long bounce trade, I’m going to take home a relatively modest long position of NUGT but not enough to get hurt, should the miners gap down on Monday.

Have a great weekend.  -RP