This morning I woke up and flipped on the computer and my market-monitoring screens to find a sea of green. Everything up: stocks, commodities, gold & silver. Then what happened? My music player, in shuffle mode, queued up the Who's "Don't Get Fooled Again."

Funny. Coincidence? I don't think so. Roger Daltry is onto something. It would be easy to get lulled into a newfound sense of complacency if you didn't consider that just a month ago, the S&P rallied from a bottom of 1,050 to 1,116. That was a huge fakeout.

This last rally has now taken us from a low of 1022 back to the current 1,094. Powerful, no doubt. But it's also giving me a funny sense of deja vu. Note that the last rally, in June, was about 66 points in the S&P. The current rally has retraced 82 points of the recent decline, but it's still below June's high. If it's going to fail, it should fail this week. If not, the bulls have a solid argument to get bullish again.

Are the bulls really confident? So far in the last two months or so, the 50-day moving average has turned down, it's cross the 200-day moving average, and we've traced out a lower low and a lower high on a subsequent high. Would that make you comfortably long stocks? Not for me.

The bulls would like the June high of S&P 1,116 to be taken out. I, for one, do not think it will, but I remain flexible as always, with the bulk of my portfolio in cash, with the goal selectively buying super-duper cheap companies like Microsoft and JNJ slowly over the next 5 years. I will be selectively hedging with trading shorts. My S&P futures short was stopped out about 20 points again, but I thought about putting another short in when I heard the Who's "Don't Get Fooled Again." I'm probably going to wait for tomorrow, to see if we retrace this morning's gap. Then I'll pull the trigger on an S&P short -- again.

The most remarkable features to me this morning is the incredible volatility in the currencies. The Euro is screaming higher into the 1.27 area and the dollar is getting absolutely clobbered. Also, the old relationship between gold and the dollar, with gold up on dollar weakness, appears to have re-established itself after taking a sojourn.Clearly dollar printing is helping to fuel the party in equities.

What all of this is telling me is that the market activity -- not just in stocks -- remains remarkably volatile, illiiquid, and unpredictable. Don't be lulled into any sense of complacency, as capital markets are still a dangerous venue being controlled by robot-computers amped up on free government money.