Well, that didn't last long. The dollar-driven rebound in risky assets that I wrote about in my column this week petered out Thursday as worries about a slowdown in nonmanufacturing services and the ongoing eurozone crisis eclipsed the good feelings seen Tuesday after a stronger-than-expect​ed report on manufacturing activity. People are also increasingly concerned about the Greek and French elections Sunday.

Copper, crude oil, gold. They're all moving lower as the U.S. dollar bounces higher against the euro. It seems the twisted logic of interpreting bad news as good (since it increases the odds of additional easing by the Federal Reserve at its June policy meeting) has faded. Now traders are just looking at bad news as bad. And once again, they're seeking the safety of the U.S. dollar.

All of this has put a very scary chart pattern back into play -- a pattern that technical analysis suggests would lead to a 5% drop for the NYSE Composite ($NYA) from current levels.

The chart above illustrates just how violent the head-fake rally of the past few days has been. After sliding lower for months, cyclical, economically sensitive stocks looked like they were trying to put together a new uptrend earlier this week. It wasn't to be. Almost immediately, the sellers pounced -- punishing energy, financial, semiconductor and materials stocks while bidding up defensives like consumer staples.

A buy-the-dip mentality has been replaced by a sell-the-rallies outlook. That's a big change. One that I didn't expect so soon.  

As a result, the head-and-shoulders reversal pattern I've been talking about is back in play after it looked like for the briefest of moments that the bulls were going to invalidate it by pushing stocks up and over their February highs. It wasn't to be as the 8,200 level on the NYSE Composite was breached for a moment Tuesday (likely because of the positive influence of first-of-the-month retirement account inflows) before the gains were immediately reversed.

This has all caught me by surprise, as I was looking for the market to start discounting the likelihood of the Fed launching a third round of quantitative easing toward the end of June in reaction to a deterioration of the growth outlook. Remember that Fed Chairman Ben Bernanke, during his recent press conference, told the world that the threshold for additional easing would be a period of subtrend growth.

With GDP growth clocking in at just 2.2% in the first quarter and likely to be even lower in the second, that qualification has been met. If Friday's jobs report is weak -- as the positive impact from a warmer-than-normal winter fades -- both growth and employment will be showing signs of trouble. This will corroborate the weakness being reflected in ancillary data such as real wages and regional manufacturing surveys.

But before we get the QE3 market rebound, it appears we need to suffer a little more pain first.

Trading update

Thursday, I closed the majority of my new long positions in the Edge Letter Sample Portfolio and added a number of new short and short ETF holdings in the materials and financial sectors. I'm essentially re-establishing my net short exposure after booking profits in them last week. New short positions include Gerdau USA (GGB), Citigroup (C), and AKSteel (AKS).

I'm still looking for a big move higher in precious metals in the weeks to come. But just not yet, apparently.

Disclosure: Anthony has recommended GGB short to his newsletter subscribers.

Check out Anthony's investment advisory service The Edge. A two-week free trial has been extended to MSN Money readers. Click here to sign up. Contact Anthony at anthony@edgeletter.c​​om and follow him on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below.