"The message that I am getting from the market, the “something” that has changed is that the US dollar is no longer a strong currency. Typically the US dollar falls when its economic cycle begins to roll over. Many of the indicators that I look at show the US is either in or heading for recession."
There is unfortunately no basis for renewed optimism that this current litigation will have any meaningful impact on precious metals manipulation – with respect to either silver or gold.
If history proves prophetic, buckle up. Stock prices may be in for a precipitous decline.
"If the market is to make a new high this rally must break through the resistance in the S&P 500 around the 1950 area on increasing volume. If it fails, then the decline will drop to the 1740 area which I have repeatedly said MUST HOLD or the markets are in a MAJOR BEAR MARKET that will test the lows reached in 2009."
"If one is looking for key technical indicators to ring the bell on the cyclical bull market- maybe it has just rung loud and clear. A renminbi devaluation will only sever an already badly frayed safety rope..."
"We originally looked for up to half of past losses to be recovered. We believe that we are perhaps 2/3rds of the way through the bounce, and would look to start fading it within days. We stick to the overriding view that one should use any strength as an opportunity to reduce equity allocation."
"...this is the real world where 'trend followers' do battle with 'mean reverters'... US (and global) equities may be finally responding to tactical oversolds with what we believe is a sell strength relief rally..."
- Weakness in the Canadian Economy driving its currency lower
- Inverse relationship between commodity prices and USDCAD exchange rate
- Why there could be a reversal in trend
How did the Canadian currency reach a twelve year low?
The US Dollar reached a recent high against CAD at 1.41081 on January 6th a level not seen since August 2003. The general bull trend the green back has been in picked up momentum since talk begun by the Fed of a return to higher interest rates.
“From the mass psychology perspective, Gold is very close to putting in a bottom. Sentiment investors, contrarian investors and investors who are familiar with the concept of mass psychology should consider taking a closer look at the precious metal’s sector now”.
One of the primary arguments by the more "bullish" media is that the current setup is much like that of 2011 following the "debt ceiling" debate and global economic slowdown caused by the Tsunami in Japan. While there are certainly some similarities, such as the weakness being spread from China and a market selloff, there are some marked differences.
Gains in the foreign currencies appears to be mostly short-covering rather than bottom-picking per se. In bigger picture the dollar is consolidating its earlier gains.
"...the markets did retest the late August lows, and when combined with the very oversold conditions, led to a frantic 'short covering' rally back to previous resistance. It is worth noting that the recent market action is very similar to that of the August decline and initial rebound as well... . If the market is still confined within a more "bearish" trend, the current rally, like the ones that preceded it, will be a "rally to nowhere."
The poor jobs report weighed on the dollar, but the greenback recovered as the session progressed. It is not clear the jobs report was a game changer. Stay tuned.
Yellen's reaffirmation of a likely rate before year-end helped lift the dollar. Look for some consolidation ahead of the US jobs data.