The chart above is of the only bull market in town. We parked the majority of our funds in UUP, since sept 15th and are very thankful. It has one last leg remaining, the divergences are already showing. We think the dollar index will go into the 90s before the retracement really begins.
While we think every chart has its own rhythm, sometimes correlations do occur and as of now, there is a significant inverse correlation between the stock market and the dollar. Accordingly, we believe there is one last down leg in the stock indices and all the commodity names.
According to our calculations as of now, we are looking for a multi-month top in and around the first week of december for the dollar and subsequently, also believe the stock market will bottom around that time.
When this does occur, we expect the commodities and emerging markets to really take off. We believe some of the commodities could double from their bottoms. Any one short commodity names, better take care for we think the rally in these names will be very very vicious.
3 comments:
You think there's only one more leg down in the stock market? You must be kidding. People are still expecting a rally and when people are still 'expecting' there will be no type of bottom. Meanwhile the dollar bubble will end next year where eventually it will devalue with all the debt the US Gov has decided to take on.
this is a short term bottom before a multi month bottom.
This will be a tradable bottom not the bottom.
Also, why do you say the dollar bubble will end next year?
There could be higher prices and hyperinflation but the dollar may not depreciate against the other currencies in the dollar index - this is doubtful. Infact I can make a case for the dollar index going all the way to 120 in the next couple of years. We will see.
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