The range lives!! For a month now, bull and bear alike have survived side by side in this tight 30 or so S&P point range. I miss the good old days where it could take all of 7 minutes to swing that far. Don't you?

The volatility has dried up so much I believe the daily bollinger bands may cross! That's impossible of course, but you get the idea. They are squeezed together very tightly however...an indication that volatility will soon rise. The direction of the move is the only question.

With the dollar trying to bottom and Gold reversing from it's mini parabolic blow off move, my guess would be that equities would break lower. The 50 day moving average is just below these levels. A breach of that may be the spark needed to get a fire going as the old song goes.

The breakdown in gold is really not all that surprising if you simply look at the flag pattern it was in. Forget it's gold and just look at the pattern. It counted up to near the levels it broke down from. Noticed I said "near" and not "to" the target. The parabolic nature of the move may be the reason it broke down short of the ideal target. Just too many people jumped on board at the same time.

What happens next will depend on the dollar. It's been trying and trying to find a bottom. The shorts just kept piling on and driving it lower. But it held it's low from early 08, and by a fairly wide margin. Also, the divergences have been piling for some time up in favor of a bottom, so no one can say they didn't have warning.

A trip to the 200 day MA for the dollar is almost a given now that the 50 day has been breached. The real battle should be fought at that level. A lot of dollar shorts could be squeezed with a break above that. You think Goldman doesn't realize that?

So watch the dollar tomorrow along with the 1080 level in the S&P. A hard break of that level will surely bring out fireworks. 
I should note, however, that the market's been turning up from these "oversold at support" levels for the last month, so be alert.