CHICAGO (

TheStreet

) -- The market can stay irrational longer than we can stay solvent. This mantra is something every trader must keep in mind. It keeps us from getting married to positions and beliefs.

Another prominent old saying goes, "The trend is your friend until the end." Just ask anyone who got long stocks back in March. Ask any of the bears who have literally been run over by the power and magnitude of this rally. Like it or not, this is very much still a buy-the-dips market until proven otherwise.

TST Recommends

In a

previous article

, I discussed heavy resistance on the

S&P 500

futures around the 1010-1012 area. The market blew through this area on Friday like a warm knife through butter. After all, we are seeing some improvement in everything from manufacturing to housing to retail to consumer confidence.

Nevertheless, the $64,000 question remains how much further this rally can run and be sustained. Mean reversion tells us that a sizable correction in the near future is likely. Perhaps we are getting closer to -- if we're not already at -- the tipping point.

We can see that there is still a large degree of fear in the marketplace. Look at Treasuries, for example. Bonds and notes continue to claw their way higher. The only reason I can think of that investors would purchase such low-yielding securities is that they are afraid to put the money to work elsewhere in potentially higher-yielding products.

The VIX tells us a similar story. Although some of the spikes in recent weeks can also be contributed to "panic" call-buying, we are still seeing investors willing to pay a premium for put protection. And the put-buying has been increasing. Of course many investors are just looking to protect recent profits, but there also remains a strong sense of foreboding in regards to the market's demise.

In addition, we have seen a few sessions now where the market had every reason to end considerably higher but failed to do so. Even today, as of this writing, the market has surrendered its gains. It certainly looks as if the rally is getting "tired" and the day of reckoning is near.

On another note, we have discussed the correlation between crude oil prices and equities over the last several weeks. Crude oil is once again having difficulty breaking through heavy resistance in the mid $70s. Demand for crude oil and gasoline in the coming months is forecast to remain flat to weak. Maybe this is telling us something about consumers and the direction that equities will take in the coming weeks.

A lot of the buying that has been seen in commodities recently has been due to perceived additional downside in the greenback. Thus far, the dollar index has held the bottom end of its range. If this continues, it will likely pressure commodities and in turn pressure equities. The next six to eight weeks will be very telling -- especially going into September and October, which tend to be difficult months for the market.

I continue to like the idea of selling calls at these levels on the S&P 500 futures (although please remember that trading in futures and options is risky, isn't suitable for all investors and can result in losses greater than one's original investment). Any moves by crude oil into the mid-$70s will continue to provide excellent call-selling opportunities. In addition, currencies of commodity-producing countries like Canada and Australia will potentially provide some premium-selling opportunities as well. Look for good opportunities to do so however, and do not force it.

There is no sense in chasing a market that has already begun to weaken. If we see what appears to be a blow-off top in equities, that would be ideal in our book. And maybe, just maybe, we are on the doorstep.

-- Written by Matt Zeman in Chicago

.

Matt Zeman is a principal with Lasalle Futures Group and chief market strategist for Time Means Money.Com.