The Greenback has Bottomed

The first trading day in November the Dow has been down 3 in a row after a 4 year bull run,and was down 362 points in 2007. Just think, at that time, being down 362 points was a HUGE day down.

It became the norm last year. And now, we see typical 586 point moves between a top and a bottom, often within 21 days or yet. The market has become FAST.

Now, the facts: The market dropped to 9644, just below our strong support line of 9679. Within our Dow projections, updated, you'll note our next potential bottom, and the exhaustive gap lines the market could use to "run up" again.



Stansberry and Associates wrote Friday:

"Today is a pivotal day for the market.

Stocks are either ready to break down and head toward the October lows – a break below will lead to a much more negative move over time – or the bulls will make a stand and rally into the seasonally strong period of November and December.

I favor the former scenario, but it could go either way. And it all depends on the U.S. dollar.

Stocks have been moving inverse to the U.S. dollar for the better part of two years now. Indeed, when the dollar bottomed last September, stocks began their nosedive. And the peak in the dollar in March coincided perfectly with the bottom in stocks.

The dollar broke to the upside of a bullish falling-wedge pattern on Wednesday. That event spooked the market and was largely the reason for the extended decline and temporary breakdown in the S&P 500.

The dollar was weak yesterday. It dropped back down to retest the breakout level. Not surprisingly, stocks rallied in response.

So the future of this market is entirely in the hands of the dollar. If the greenback has bottomed, stocks have peaked. If the dollar starts to fall again and make new lows, stocks will make new highs.

It's really no more complicated than that"

The dollar broke to the upside of a bullish falling-wedge pattern on Wednesday. That event spooked the market and was largely the reason for the extended decline and temporary breakdown in the S&P 500.

The dollar was weak yesterday. It dropped back down to retest the breakout level. Not surprisingly, stocks rallied in response.

So the future of this market is entirely in the hands of the dollar. If the greenback has bottomed, stocks have peaked. If the dollar starts to fall again and make new lows, stocks will make new highs.

It's really no more complicated than that"

The Great Depression and World War II created the modern world in lots of ways. They also created one of the primary lenses through which we view it. What the war brought us was a middle class, yearning more, buying on "lay away," and leading to more and more ways to communicate. And now the newsbites and Blackberry news of instant attention, or the desire to spend $100 on a dinner has become a norm.

I believe we are seeing a major shift worldwide in human sentiment, and action, and are being knifed in the corners by the many that do not want any corruption to change. Note I didn't say corruption to end, as it's been going on forever, but a way of thinking long term on "what the right thing to do is."

So, look at a large drop that was a record in 2007, and is now "a day" in 2009.