Dollar daily - I had a really good EWT count on this one. See fib target boxes. OK, here is the deal. Price is at the upper trendline. RSI is at the upper trendline. MACD is at the upper trendline. If it is gonna turn back this would be a great spot, of course this is a good spot for it to break out as well. I'm in tune with Mark Faber's thinking that the dollar is going to $0 or somewhere near there in a few years, so a pop here to retracement area then continued weakness is what I am thinking.
Here is my Dollar v.SPX comparison chart. Look at the pink lines on RSI. The divergence in the MACD histogram and the consolidation in S Sto. Barring a really dramatic move in the dollar up, this chart says not yet on the market fall. Look for a divergence in RSI.
Moron here...Shanky, I think statements about the buck going to $0 are so baseless, it distracts from your service, message etc...Faber is a bit of a quack and remember, doom and gloom sells better than anything else...He sells newsletters and those kinds of statements make for catch headlines, but he doesn't back them up with much...I certainly won't gloss over the structural issues facing the dollar, but reserve currencies are tough to displace...Japan, the largest export economy in the world has much worse metrics than the US, ditto for the UK...The world reserve currency has been reserved for the worlds military superpowers and that's not likely to change...Also, even with the massive losses worldwide, our country has vast wealth. Guess who has the largest gold reserves in the world? Statements like the $ going to zero are pure poppycock and just the type of statements that will lead to a multi year run in the dollar....Despite all the problems, the US is still the tallest midget. I'm not an EWI guy, but I believe Prechter is a dollar bull?
ReplyDeleteMoron, thanks for the input. Long and tough topics to debate, so we can keep it here of change the discussion to email later if you like. I have certain opinions and via the blog I post snippets due to time and space. Maybe I should be more clear in describing more serious points like the dollar going to zero.
ReplyDeleteI do happen to be in the camp that believes the dollar as a reserve currency will be replaced by some sort of world currency. As this crisis comes to roost and the financial system around the globe deteriorates radical changes will take place as the global economic restructuring takes place. This is just my view and I have bought in. By no means do I mean to degrade the dollar or the ever resilient American, but I sincerely believe this time is different.
The derivatives issues that can't be regulated are bigger than all of us and IMHO barring some sort of "calling all bets off and even" we're all screwed. Thus, while Japan has survived for many years in their slump, that was a problem isolated to one country. This is a global issue.
Your point on the military power is very good, but global liberalism, the green movement, the current administration and the UN will further endear us as the worlds largest police force. This is not the Bush cabal in charge anymore. Sure we can kick anyone's ass, but what good is it if we're not going to invade and take over. Oil drives the military machine and I think the O has figured this out, so he's not backing out of Afghanistan.
As for the gold reserves, until a factual audit is proven I doubt any countries accounting of their holdings (and many ETFs for that matter). If gold was so important, I believe Bush Sr. would have invaded S. Africa of another large nation with gold reserves.
We are the tallest, strongest and richest midget but we' don't have the oil (or won't go drill it for some bizarre reason). I do not prescribe to EWI 100%. I use it as a tool AFTER proper TA is applied. Sometimes it fits. Prechter is just Prechter. I an a dollar bear. Big Ben will keep on printing his way out of this mess and dig a deeper hole. When he is done printing there will be no telling how much more the value of the dollar will have declined.
Sorry it got a little long. I appreciate your views and insight.
Moron here: Don't get me started on our energy policy, I'll throw up, but I do think its important that people really understand what the Fed is doing and isn't doing...Set aside what appears to be possible manipulation and all the bailout money to the big banks for a second, but I often hear people say the Fed is "printing money" and of course that is not at all accurate...The Fed has extended credit , not literally printing money...This increases the monetarey base (money supply)...All trade is done with credit, not currency...Today's credit can be withdrawn at anytime...The Fed of course is hoping for the multiplier effect to take hold, which it hasn't (bank reserves through the roof)...Although our debt to GDP is climbing, the costs of servicing the debt is very low currently. There is little inflation risk in what the Fed is doing unless we see a major uptick in velocity, in other words, the banks start really lending, then the Fed will need to withdraw the liquidity...But, I think there is a misconception that the Fed is printing money making each dollar worth less by printing more of them and that is simply poppycock...I'm clearly in the deflation camp...those who call for a decline in the dollar clearly have to be in the inflation camp and I'm not certain they really understand that. From the 2008 lows, the dollar surged an avg of 20%, I'd argue we've simply corrected a massive flight to safety and if we are all correct in equities moving lower, I suspect it will reignite the flight to safety....In times of duress, capital finds its way into the safest assets...It will take decades to displace the dollar I'm guessing and that is a little longer then I'll be around, so my investment timeframe will have to be much shorter. Sadly I agree with you on the global socialism, greening etc, however, don't you sense that is changing already in this country? We will probably see a lot of dems thrown out in 2010....I'm pretty sure Obama will be a one term President as daily even stupid people are realizing this guy is in way over his head. He got lucky, plain and simple. Anyway, let's figure out how to make some money....I had an order in yesterday to sell all my emini hedgies at 1089 and they traded to 1088.50 while I was out of the office....I feel your pain.
ReplyDeleteMoron - I'm in the deflation then inflation camp FYI. I do appreciate your views. This thing is in the process of bottoming. I'm not ruling out one more pop and drop on this fall. IMHO when we do climb, this will be the last. Top may or may not be in. I'm 75% it is in. Let's make $$$$$$$$$$$$$$$$!
ReplyDeletealright, here's a wrench for ya..... if they debase the currency and retire it for good, then every single dollar around will be worth more than a dollar and will be collected as souveniers of the forgotten republic..... so keep your bills, bill..... lol.....
ReplyDeleteoh, and I didn't run a spell check on that so forgive me, pls..... burp..... and enough with the chart, pop is here and pop is good..... get faz.....
ReplyDeleteGreat discussion Shanky. I appreciate your perspective.
ReplyDelete