The U.S. stock market is in a clearly defined uptrend. The #1 rule of technical analysis is to respect clearly defined trends at all times. I can fade trends and try to short the top pip; but I have to respect the trend, which means realizing that the majority of the time I'm going to be wrong and that I have to always protect myself with a stoploss.
That said, the best risk to reward ratios are found at turning points in the market. I'm a huge fan of Paul Tudor Jones. The man nailed the move in 1987. The key to picking tops and bottoms is to have very specific criteria that must be met before an entry is made - and realizing it might take a couple of shots.
Everyone keeps talking about the how the U.S. Dollar is going to really strengthen when the stock market collapses soon and the sad reality is that they are trading that bias - against what the tape is telling us. I'll trade what I see. If the stock market nose dives, I'll be shorting the Euro and commodity currencies in a heartbeat. But all I see from the tape is equity markets that are in a strong uptrend due to QE and an "improving" U.S. economy (which is the reason for a strong USD/JPY today.) The S&P 500 dropped over 11.50 points today, and ripped right back thanks to it being a POMO day. The tape is telling me that the S&P 500 and Dow Jones are going to all time highs, and that if we see a drop in equities, it will most likely be a good opportunity to BTFD.
Chances are, these are not the rips down you're looking for.
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