As we head towards the opening month, most likely which will set the tone for the rest of the year, I would look at two scenarios before the significant bearish move to the downside.
Scenario no 1. This opening week will create a top in most of these markets and a resumption to the downside. The dow is up 2% today, and oil, gold, a few percentages as well. The euro seems confident. In Scenario no 1, we expect the markets to have or already have made a top today and allow the market to grind this entire week, before a break down on Friday. Which means the highs are already behind us today, or there is another one more attempt left to the upside, in either case, we expect a reversal back to pre holiday levels by Monday.
Which means continuation of the dollar to the upside and a RISK OFF attitude back in the markets.
In Scenario No 2. This market continues to the meltup and top off sometime in March and then we break new lows and even lower lows than last October 3, which if anyone has noticed was almost 22% away. The market has rallied much more.
My own bet is on the RISK OFF trade.