king dollar..notes for monday

 Seems to me that the dollar is still the dog and other markets remain the tail. The dxy(dollar index) has bumped up against a down slopping trend line at  79.71.  This is a trendline that connects a series of daily highs beginning on july 25th. At this point there is no reason to abandon a longer term thesis that the dollar is still in decline. Conveniently, that theory still fits in nicely with both the s+p and nasdaq futures. Nqz2, after having broken the neckline of a distinct head and shoulders pattern , has met the downside objective of  2675(trading below it to 2660) and bounced. At the same time the s+p(esz2) traded down to well defined support at 1420ish..What im trying to say is that nothing has happened to cause any alarm, and equities should now resume uptrend.. Also supporting this theory is that open interest declined  in s+p minis after fridays trade, suggesting long liquidation, not new short positions...
  The obvious question is what are we supposed to buy as overall markets recover?. There are a couple of ways thatwe are considering playing it. The fact that long end treasuries essentially ignored fridays sell-off suggests serious reluctance to add to long treasury positions. If equity markets begin a risk-on phase treasuries could be hit hard. We may buy otm calls in tbt or puts on the cme ten-year. Banks have held in well and as market recovers probably should out perform. I have bac and will consider adding on a trade above 9.61. Still like the homebuilders and have hov and ryl on.  Im not sure how sensitive homebuilders are going to be to short term swings in overall market but it obviously cant hurt..
  Tonight should be a big night on tv and if the bears win...wait...i mean if governer romney continues to gain momentum that could add to markets tailwind..I will try to watch both events mostly because if this is the moment in our nations history where i debate erupts into fists, we dont want to read about it second hand...enjoy...
  As always, if you have questions re; managed futures, hedge fund allocations or assitance with overlay strategies please contact us jiuorio@tjmbrokerage.com