In recent days, Russian President Dmitry Medvedev has questioned the U.S. dollar’s future as a global reserve currency saying a mix of “regional” currencies, including the ruble, would make the world economy more stable. The ruble, more stable? This morning the Russian Central Bank said it will reduce its share of US Treasuries. Once the dyke springs a leak and players break ranks, it seems there is no turning back. What has the U.S. accomplished in trying to forestall the natural forces of debt unwinding and the bear in squandering the supremacy of its currency? It’s power?

I can’t help but to think that somewhere in the next few years a currency crisis will erupt. The currencies are the key. The commodities dance to the currency song, while stocks samba to commodities' lead. If you superimpose the Research In Motion (RIMM) chart over the chart of crude oil, you'll find they've traded almost tick for tick. The crowded trade is déjà vu all over again, and the song remains the same.

The sultans of swing are the Mambo Kings.





In the last piece, I laid out reasons why the market sets up as a short. The S&P traded down 14 points on Monday before a bat out of hell reversal in the last half-hour. The decline tested the prior week’s lows, failing to turn the Weekly Swing Chart down.

I said: “If the S&P should rise back above Friday’s high at any point this week then so be it, the indication would be we have a failed pattern and a failed set up. Setups are only setups, not guarantees.”

This morning, the S&P appears poised to make another stab over 950.