Two possibilities as always... I am leaning towards Bearish!

My Saturday commentary seems to be right on the money from last two Saturdays... Fortunately I put my money where my mouth is, so I am a tad bit happy this past 2 weeks... ;)..

Now, as of yesterday the current situation has become very interesting... I mean -

1. the $DXY is all coiled up with positive divergences all over (ready to shoot high any moment, which will be a catalyst for markets to dive lower)

2. The markets are still way overbought in terms of # of stocks above 50EMA is still in the 70s - 80s.

3. The market leaders like AAPL, GS etc. are faltering (fundamentals of AAPL and GS may be sound but they are just way too overbought) and leadership is changing to commodities once again as stocks like FCX and coal plays are spiking higher on weaker dollar

In a nutshell, market just needs an excuse now (any excuse) to start this sell-off.. Nevertheless, the contrarian in me thinks that the market may just (just for heck of washing the weak bears out of their short positions) spike higher to $1120 -$1150 on $SPX, which is the 150-200EMA on weekly chart. Thus, I am playing it cautious right now as I feel that this spike is likely, quite likely if I may add since $VIX is also sitting right at 23 level and its unlikely that this level will hold as it has touched it sooo many times already. It may just go below 23, touch 18, before it spikes... it all depends on the earnings and dollar next week..

Bottomline - I am not holding anything big... just wait and watch the $VIX and $DXY...

PS: Note that $VIX still has not closed below 23! It would be need to close below 2 days in a row for the $SPX to see the target of 1120. If $VIX bounces off of the 23 support and keeps doing that for some time, I would assume that this would be the intermediate top and 980 on $SPX is definitely in the cards then. Lets see how it unfolds these coming weeks.