The Good Doctor
Looks like the dollar is finally bouncing here, after a couple of weeks of straight hind-mammary sucking. This will probably also give the market that respite for which you’ve been searching these past crazy weeks.
As you know I use few lodestones to guide my way here, and a major guide for me is the U.S. dollar, as we’ve discussed. It’s rare you’ll see the dollar rise and the markets ascend along with it in a weak economic environment like the one we’re experiencing right now. More likely, any uptick you are seeing in the stock market is a panic move by investors seeking somewhere to hedge them against eroding value of the greenback. Consequently, a dollar upsurge ought to dampen that enthusiasm.
Take this week to take something off the top, and perhaps look for some bargains– preferably in the precious metal or emerging market sphere. I’d say ag too, but it’s unclear whether ag will cool down in this ”corn prices as high as an elephants eye” environment.
The Trannies are another “tell” for me, as I like to think I keep an eye on the Dow Theory tells as well. Let’s be straight up — the Trannies have been performing well this year, and that’s one reason I’ve remained obstinately bullish even through the dire predictions of late summer.
But even the Transports will have to rest off this strong recent move, and what better place than here at the April highs? You can see the mini-cup formation as it’s shaping up right now on the weekly:
As you can see, Signor Fibonacci still smiles on our Transports, and this pullback will likely not take us anywhere below the 61.8% golden ratio limit. In fact, you can see that despite the slightly overbought RSA and the turning slow stochastics, the Transports are still under heavy accumulation here.
So take a week, fly a kite, stuff a turkey (for practice), make your pet goat a lobster costume for Halloween… whatever. This may be a week to be out of the market.
In the meantime, I will be looking at some Pabst Blue Ribbon (PBR) for apres the bull back. I love me that Bra-zillion Earl, with its Bra-zillion barrels stored safely below the South Atlantic Sea.
No worries, I shall have other suggestions as well. For now, you might consider a spin in the FAZ-mobile. And consider the source… it’s been a long time since I’ve shorted banks, but this week may be the time…
Best to you all.