Thursday, October 8, 2009

Chart thoughts:

Once again perusing the charts.

Gold is ridonkulous and RSI is pinging overbought.  Same with many oil stocks but not all.

meanwhile,  SPY did a doji and  QQQQ and XLF were both black candles (a win for bulls, but close was lower than the open) -- this denote a lot of selling pressure throughout the day.

The answer can be found in UUP -- a tremendous volume day and the lowest close since March.  Yep -- this is the Greenspan/Bernanke strategy writ large.  Just look how the destruction of the dollar can create rallies, that benefit the top 10% and let the rest of the fuckers out there deal with inflation and no jobs.  Now Geithner knows the drill.  Whenever things get too hairy he will say "the U.S. supports a strong dollar policy" which really means "the U.S. supports whatever get the guy in charge reelected".

Market rallies get you reelected.  Nobody wants to be like Bush Senior.  But -- there is a caveat.  The pussification of the dollar cannot -- absolutely cannot -- go exponential.  You can't have people mad-rush exiting the dollar.  That's going to be totally screw everything up.  You still have to sell a few trillion in Treasury debt each year.  Reckless abandonment will also obviously -- create a rush to commodities and ignite inflation.  And this of course, is what happened today -- you had a madrush to gold/oil and the dollar blasted.

 So there's two things at play in the short term for OIH in particular.

1) filled the gap on the weekly chart
2) overbought gold/commodity play dangerous to Fed
3) XLF/SPY/QQQQ mostly non-confirming

Basically we've reached the point, I think, where this rally is at this point in time, completely running on a dollar collapse move.

 If I'm correct, the dollar will receive some intervention support for the next few days to avoid a blow out.  I have kept and loaded up ERY with a wide stop -- now this is probably going to end up being a small disaster but I'm still only risking 1/3 of 1% of my portfolio.  I think it's a worthwhile hedge and I continue to dabble in inverse ETFs despite dozens of failures.  Still -- I think my read of the market is absolutely correct.   So I bid you all good luck.  The dollar has just about fallen off the edge.

 But as with all things, the Fed is the master of stick saves.  And if indeed the dollar does go up -- well, the rest of the market is already gearing for a takedown.  Trade cautiously.  Be humble.  I'm sure most of you are better at this game than I am.  But it's always nice to get another opinion.  Even if you think I'm completely wrong here.    good luck out there.


  Amazing -- I just finished my thesis and there it is -- Ben responding exactly to the story of the day. He must get out there and defend the dollar on ripshit drops like today -- a mega selloff is terrible for the U.S.   Now he's obviously not going to raise rates unless he has to -- but if this selloff continues -- he definitely might have to step in... so Geithner is calling Goldman right now and saying "Look, boys, you got to cool it for a few days, Ben's getting a little testy."

 If the market doesn't drop tomorrow, I really will be shocked tomorrow.  It's all plain as day now.

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