Weekly Tao Mon 8-10-09

The past week has been very much a transition week for the markets. I like to step aside from trading when the trading becomes shallow and doesn't make since. So I have taken a much needed rest while waiting for MR. Market makes up it's mind.

Today was the lowest volume day this year and it is very difficult to determine an overall direction. Bear market rally's die on decreasing volume. It dose appear the US Dollar is beginning to find support and has gained strength in the last 4 days. If this continues after the FOMC Meeting this week we could see a correction of rally or something more severe.

At this time the markets are very overbought and are trading in a narrow range and I am not comfortable taking any heavy trades long or short until we see some clear movement out of this consolidation .

My best guess is a correction will begin and price will move to SPX 960 area in the next week.