US Dollar ETF (UUP) trend analysis

US Dollar confirmed its uptrend today by rebounding to 23 area.  Higher low pattern indicates a relatively steep up trend. $23.42, $23.88 and $24.35 are important Fib levels to watch going forward.

Bull Market Correction or Start of Bear Market?

Most of time, market participants (hedge funds, prop desks) like to hide their hands as they don't like followers in the early stage of a market turning point.  S&P rebounded from Tuesday low and closed fractionally above 200EMA on Thursday, but failed to close above 200EMA on Friday.  The key question now remains: are we at a bull market correction or start of bear market?  I'd like to use VIX, one of my favorite leading indicators and my favorite PPO divergence analysis tool to dissect early signs of future market direction

As you can see in the chart (click to enlarge), VIX dropped this week to a level that's higher than the level in the week when "European TARP" was announced, however, the PPO has dropped to a level lower than that week, this divergence is indicating that fear is subsiding as of now, and it is a slim of evidence that the market is under bulls' control despite the Friday's failed test of 200 EMA.

Euro Index made a new low last week, however comparing with the low it made in mid-May, the PPO is picking up, this divergence is suggesting a trend change is potentially forming.

Similar but contrary to Euro Index, US Dollar ETF (UUP) is showing a divergence between price move and PPO.