After rising smartly on Monday, we can see that the ES futures (above) made new highs before settling into a three-day range. That isn't surprising, given that the recent rally has been accompanied by quite a few notable divergences. Also on my radar is the fact that a number of risk assets have retraced essentially all of their gains from earlier in the week, including oil, Aussie dollar (vs. USD), and euro (vs USD). I'm watching that situation carefully; a short-covering rally in the U.S. dollar would take risk assets out of the much-chronicled carry trade, weighing on stocks. Should we hold the Nov. 10 lows in stocks, I will be monitoring the vigor of the next upmove closely to see if we can broaden the base of the bull move.
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