As bullish as traders have become on the dollar lately I have a hard time seeing new 2012 highs coming anytime soon. Note the negative divergence on RSI.

The more likely scenario is that the Dollar has formed a short term top, which may allow the general markets rally to continue for a little while longer. If this is going to play out like this the SPX (seen below) needs to find support at the upper down-sloping trendline seen below. If that fails and/or UUP can break out and sustain the move above $23, then all bets are off. The markets could then find itself in a new leg down.

These are just a few charts to watch for further clues as to the short term direction of the markets.

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