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This morning’s unemployment report revealed a major liability that the Street levered up on earlier this week – pressing stocks on the short side ahead of a well anticipated number of 7.6%.

While the “consensus” Street estimate was 7.5%, I was hearing whispers of an 8 handle from the Depression-ista camp all week long. As the guys on Monday Night Football would say, “C’mon Man!” – this is not a Great Depression.

Reality is that what’s bad for the US Dollar (which is down today), like an annual chart like the one spiking below, is good for the US stock market. This inverse correlation has continued to fortify itself since the November SP500 low of 752. Most of the December rally was met with a weakening US$ index, and the most powerful squeezes in 2009 have come on the heels of US$ down days.

There is a ton of resistance in the SP500 range of 863-873. Unless the US$ Index can break down and close below $84.44, I think the probability of this February US stock market rally continuing goes down. I am making sales today as a result.

Trade the ranges.

Keith R. McCullough
CEO & Chief Investment Officer