14 replies to this topic

[Doug]

From the Jan 07 high the dollar futures are in an extended wave five free fall with 73 the next support. From 73 a bounce to 76/78 would be expected.

Best,
Larry

Keeping in mind the bigger picture for the dollar's pattern, this weekly chart shows the last four years:

U.S. Dollar chart, Weekly, 2004-present


The move down from 2005 is one big A-B-C pullback for bold wave-( on the chart. That wave count calls for a very large rally in bold wave-© that takes us well into next year. But it needs to start rallying now as it's just about reached its limit for how far it can drop without turning the wave pattern very bearish. It could get a quick spike down post-FOMC but considering the multiple bullish divergences on every time frame now, from 5-min to monthly, I just don't see much more, if any, downside left to this.

I'd even go so far as to say if the dollar doesn't rally from here then it's in real trouble. In that case it could be a long way from a bottom and that would suggest we've got a bigger rally ahead of us in gold, oil and the other commodities and that we've got some serious inflation headed our way. It might be good for another stock market rally leg into year-end (if that long) but very likely bonds would sell off (perhaps providing some money for stock purchases) driving yields higher (stopping the Fed in their tracks and forcing them back into a rate Increase mode) and eventually killing any stock market rally due to fears of excessive inflation. Bad, bad, bad.

I see nothing good coming out of that scenario. So the Fed's in a corner here (the one I've been saying for a long time that they've painted themselves into). They can cut rates excessively now and kill the dollar (and cause all the problems I just said) or they can cut a little and cross their fingers that the dollar doesn't take a hit or they can sit tight in support of the dollar and keep the foreigners buying our debt. As I said, if forced to make a guess as to what the Fed will do based on one chart--they'll sit tight and the dollar will rally. With that forecast and a dollar you can buy yourself a cheap (very cheap) cup of coffee.

Regards,

[blackcloud]

It may be time for some lessons from the past: "By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some. The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose." [b][i]John Maynard Keynes, 1920

I also remember a quote from I think Jefferson but I can't find it, stating how if a country allows a central bank to control the money supply through inflation and then deflation, their children will wake up one day homeless, on the land that their forefathers fought for. It was something to that effect anyway. Very spooky (on Hallaween no less) that these guys had so much forethought, huh?

Let me ask you folks a simple question. Dollar index rallied nearly 50% from 1993 bottom to 2002. That surely wasn't a goverment or Fed robbery. If today we call this slide in dollar as robbery, then it must have been money in pocket in a hidden way during that era. Yet America went on one of the greatest credit binges in history, during that time.

So the bottomline - Dollar goes up, folks borrow and blame the government ; Dollar goes down, folks borrow and blame the government. It's not the dollar that's the problem. It's the gigantic debt that the baby boomers have acquired over the last 25 years which is the problem. And you can bet your last dollar that the goverment will sacrifice the dollar to prevent that mountain load of debt from imploding. Well, even if the dollar rallies here, it's not gonna solve the debt problem. The debt strapped folks will implode even more miserably, if dollar becomes dearer.

Financial planning 101 - Keep yourself out of debt. Anything else is financially irresponsible.

[dasein]

"Financial planning 101 - Keep yourself out of debt. Anything else is financially irresponsible." while i agree with the sentiment, the fact is that for the past 20+ years, using debt was the best way to accumulate wealth, and the folks who did not only saw their assets eroded by inflation. of course, this is like musical chairs or the bubble burst of 2000, you must get out before it collapses - which is why the little guy cannot compete with insiders. klh

[dasein]

"Financial planning 101 - Keep yourself out of debt. Anything else is financially irresponsible." while i agree with the sentiment, the fact is that for the past 20+ years, using debt was the best way to accumulate wealth, and the folks who did not, only saw their assets eroded by inflation. of course, this is like musical chairs or the bubble burst of 2000, you must get out before it collapses - which is why the little guy cannot compete with insiders. klh

[swanstkdh]

Is there a good fund to invest in the dollar rally?