Warming Up as They Cool Down

The U.S. Dollar is moving higher with a purpose this morning, using the UUP ETF as a rough gauge, for example. And while I am sure a fair amount of you almost never both to trade currencies, the reality is that you can see the reverberations across several asset classes, with equities and most commodities getting pounded as I write this. 

We have been waiting on a move like this for a while now. But, as usual, markets take their sweet old time coming together. 

At issue now is whether these moves, Dollar up and equities down, have further to go in both directions before we can deem it overdone. 

While every few moments on Twitter you are bound to see a tweet declaring bonafide support for stocks on the indices, the reality is that even a standard, boring, run-of-the-mill, horticultural-certified garden-variety pullback in a powerful bull market would still see a test by price on at least some of the leading stocks and sectors, even indices, of the 200-day simple moving average. 

And looking at software stocks, the IGV ETF, or chips, or the QQQ at-large with the FANG names, we have quite a ways to go downhill before those 200-day tests can even be deemed within a stone's throw. Hence, I want to give the Dollar some room to maneuver in the near-term, as the month and third quarter of trading draw to a close in the next week and a half. 

On that note, one name which I am now short (with a $290 cover stop-loss, above price), is Alibaba. 

BABA now has a monstrosity of a market cap and is another one of the major techs which became uniquely steep in its uptrend since the March lows. I like the risk/reward for a swing short, and on the BABA daily chart, below, you can see the room to drop to a targeted 200-day moving average test.