The dollar has put in at least a temporary bottom and that had traders taking profits in commodities on Monday. Gold was sharply lower, closing at $1039.80 - down $16.60. Crude oil also fell about $2, closing below the $80 level. Most other commodities were also lower, as well as the stock market.
We have seen this situation many times in the last six months. The markets look a bit inflated and we wonder how deep of a correction will we see. Most charts are showing strong reversal signals, but we have seen that several times before. You never know how deep a correction will run or whether the trend will reverse.
Short term traders should be very cautious if they are long, while long-term traders should realize that the long-term trends are higher. Tuesdays are usually turnaround days, which means there is usually a bounce after a sharply lower Monday. A sharply lower trade on Tuesday might have me thinking the correction could be a deep one.