Market amnesia?

I honestly thought the market would drift higher after Monday's sell off but believed that folks would be squaring positions before Thursday. We had a better than expected durable goods report which served to goose the markets. On top of that, housing reports are looking the brightest they've been since 2008 which is fueling the short term optimisim.

Tomorrow we have GDP numbers and jobless claims at 8:30 AM EST followed by a ruling by the Supreme Court on Obamacare sometime shortly after 10 Am EST. As I stated in my commentary on Sunday, Intrade puts the chances of some part of Obamacare, most likely the individual mandate, being overturned at about 70%. And of course, we have the start of the European Three Ring Circus, the EU Summit!

So, maybe the market is sure that Obamacare will be irretrievably wounded and is betting the house? Or that something significant is going to come out of the EU Summit? :-)
We saw market action similar to this right before the Greek vote but at that time at least I believed we had better signals coming out of Greece on the outcome of that election. The vote on Obamacare tomorrow will be split between the justices based on ideological lines with Justice Kennedy holding the swing vote. Frankly, anything can happen!

So, let's suppose we get a better revision on 1st Qtr GDP and jobless claims come in better than expected and Obamacare is wounded. What next? Has anything changed in Europe? China?

Here's the charts that I believe may be speaking to where these markets are headed in the next week:

(click on chart for larger image)

All three charts are tentative with the Dollar sporting the most relative strength as we look at the price action and momentum while Treasuries and to a greater extent Gold are sporting relative weakness.

The message of Treasuries and the Dollar are in conflict. As "risk off" assets they should be moving in tandem. I've seen Treasuries do this before (earlier in the Spring) where the momentum indicators are signaling a divergence and traders start drooling only to get burned after they short the market.

We'll see what happens but as I read the fundamental and technical "tea leaves" I see another strong market tomorrow and a perfect opportunity to position oneself on the short side of stocks going into the second day of the EU Summit on Friday. We'll see what happens ...