U.S. DOLLARS ($USD) SEEMS STILL HEADING UP..............

DOLLAR AND TREASURIES CONTROL THE RISK-OFF TRADE ... Stocks and the Dollar remain the big wild cards for gold. By extension, the Euro is big wild card for the Dollar and stocks. In short, a lot is riding on outcome of the latest EU crisis. As in the US, it is a three day weekend for most of Europe (Pentecost). This means we may have a news hiatus until at least Tuesday, and most likely into early June because the Greek elections are not until June 17th. In the meantime, we can expect plenty of market moving rumors and EU jawboning. These will no doubt center on an ECB guarantee for European bank deposits and German attitudes towards Eurobonds. The markets are currently in risk-off mode, which is bearish for stocks, oil and the Euro, but bullish for the Dollar and treasuries. Gold is positively correlated with stocks and the Euro. For clues on a shift from risk-off to risk-on, chartists should watch treasuries and the Dollar. Chart 9 shows the US Dollar Fund (UUP) breaking out over the last two weeks and challenging its January high. This breakout is bullish until proven otherwise. A sharp move back below 22.20 would negate the breakout and call for a reassessment. Chart 10 shows the 7-10 year T-Bond ETF (IEF) breaking resistance and hitting a 52-week high this month. A move below 104 is needed before we can question this breakout.