There are no two ways about it, today was not a good day for the bulls. For most of the day, it seemed like the market had recovered decently from the losses on Friday but the market gave it all back in the last one hour and the S&P finished negative. It certainly looks like MA(20) on the S&P will finally give way tomorrow - for the first time since 2nd September. The level currently stands at 1195.84.
The dollar meanwhile closed a few cents above MA(50), the first time this has happened since 10th September. I had written a detailed post this weekend going into the importance of this level for the dollar.
So, what's the best way to play these markets? In my opinion, it is staying in cash. I admit it doesn't seem the most exciting of things to do but I believe its the right thing to do. There is a time to fight and there is a time to just sit back and observe and right now it is the time to sit back and observe and protect the gains from this rally. Let the bulls and the bears fight it out. We will just join forces with the winners later on. Doesn't that seem like an awesome way to fight? To avoid the damage and losses of the battle but still be there to enjoy the spoils of victory!
Take care and good luck!