With this said, the markets have always been prone to change directions when all feels lost (i.e. when we all are yelling SELL, the markets take off!) If you notice on the graph below, the DOW is sitting directly on its Fib retracement levels. If we break below this level, the next region of support is around 8,000. If on the other hand we see a sustained rally, we could be back up to the highs of the week very soon.
FOREX markets tell the same story; indecision. However, some currencies look like good short term trades. The AUD/USD has had a big run up and is hovering around its Fib levels. I think this could get back down to the .65 level if the markets continue to fall next week.
Likewise the GBP/USD could fall more but has already moved back to relative lows and is sitting above some Fib support levels. Long-term I think the dollar will weaken (as I have stated for a while now) and this should be a good buy against the Pound. I would keep your stops tight around 1.53.
Another way to make money on dollar weakness is this UDN Dollar Bearish Fund (i.e. when the dollar weakens UDN goes up). It trades with great volume in the market and is way over-stretched just like the dollar. For traders with a more conservative risk structure this may be safer way to short the dollar indirectly.
CAL is becoming a wonderful trade. I alerted this one to members a while back and it has begun to really pay off. With the dollar weakening and Oil likely to see some sort of short term increase, airlines will get slammed. Like I have said before, I'm expecting this to more back down around the $10 level as it moves away from its 200-day moving average.
Hope everyone wasn't shaken up by the big swings this week. It's important to keep a level head during these times and not get persuaded by the media and other news commentary. Don't rush to pick the bottom or top; there will be plenty of profits left after a clear direction is established. Have a great weekend!
