Lower Start to the Market Week

8:30 AM EST The market is set to open lower today as the dollar strengthens. As I have stated in several post recently, if you can trade the dollar, the overall equity market is pretty easy to trade. As the dollar strengthens, the market heads lower. It is really an easy trade. Do not listen to the financial media. They want to give you all kinds of ideas as to why the market is doing what it is doing. The only thing that matters right now is the dollar. And of course, traders know that the dollar correlation will work until it doesn't work anymore.

I am still bearish on the market short term. The dollar has been strengthening. That part will continue to weigh on equities. The other part to watch in the market is the fact that all of the S&P sectors were down last week except for the health care sector. That is indicative of money managers moving to defensive positions. The other bearish sign is that the materials and energy sectors were exceptionally weak as compared to other sectors in the market. Those are the sectors that recover when economies around the world are getting healthy again. When the evidence states to the contrary, those sectors sell off. That certainly happened in a big way last week.

My only recommendation for today is the Ultrashort S&P 500 Powershares (SDS). This will allow you to hedge any long positions you currently have and want to keep. I do not think we are going back to the lows of the market, but I think we are in for a little pain short term. Cash is a good position right now. Until next time, stay low risk..