Quick Market Update

The last few days have been so entertaining that we felt it would be valuable to look at a few more charts.

First, let's look at this move in the stock markets. Wow.


We went from "about to confirm an S&P head and shoulders" to "Whoa, Nelly!" in three days. You can see how the slow stochastic, on the bottom (Slow STO) called the bottom and turned up. Now MACD, which measures momentum, is about to move up as well. The RSI, at the top, is above 50--which is bullish. The S&P broke above resistance at the 928ish level and above its 50 day moving average. It doesn't get much more bullish than that. However, the fact that it made such a move at the eve of going into deep, dark territory makes one wonder if someone out there is painting the tape (aka, using money to make a bearish technical picture look bullish). Refer back to the Goldman Sachs article from earlier today.

The blue horizontal lines mark support. Assuming China's GDP numbers look good tonight, we don't believe there will be much of a pullback tomorrow. There's buying support close by.

The false belief in "green shoots" continues...

This corresponded to the dollar breaking down and out of the symmetrical triangle that we discussed earlier today.


Momentum has turned negative on the dollar in the short term.

And this is the crux of our primary complaint. The goal of this government is to simply devalue your money (inflation) to make it appear that asset prices are going up. We're finishing the touches on our "Where?" series where we will prove this in greater detail. Note that gold is rising. The implication is that the dollar is dying. Your labor is being confiscated and you are being told that the value of your assets are rising. They are not. Your money, and conversely your labor, are under assault.

But I digress...

Let's look at the longer term picture.


We suspect that the S&P will run to the first Fibonacci retracement level of 1018 or so, possibly stopped at the 1000 round number level or possibly a minor overshoot to 1025, before it all rolls over. Let's check the buck for confirmation.


The buck is definitely in bear territory in the short and the long term. However, note that on this weekly chart, the stochastic is headed into positive territory. The dollar triangle has broken down, but there is support at the 78.40 level.

So, in short, we think this rally in stocks has a couple more weeks in it. The dollar will give ground to support at 78.40 or so and the S&P will hit 1000 or so. Then it all starts to roll over for a few months--probably another leg down in the markets that looks like the crash from last fall. That will be the bottom of the stock market decline and the beginning of the dollar's final stand.

Of course, that's all conjecture. We'll see how it develops over time. Stay cautious. We're in critical territory.