The dollar rules all

[conraddobler]

This is not investment advice, read at your own peril.

IMO the dollar is in the drivers seat in terms of the stock market, the market is largely repsonding to the dollar.

Dollar goes down, market goes up, dollar goes up, market goes down.

The world is so short the dollar now one of the great axioms of trading now is in play.

Any trade that one sided is what eventually drives markets.

When the whole world is short the dollar, who's left to sell the dollar?

No one and so eventually prior to the collapse of the dollar you will see epic surges in the dollar, as the shorts have to cover, they are forced to buy dollars.

The dollar going up makes dollars more valuable and stocks priced in them all else being equal fall.

So if you're looking for a market hint, IMO watch the dollar, it's at crucial levels around here, it'll either punch through to the downside or react rather sharply up from short covering.

 

[jefftheshark]

This is not investment advice, read at your own peril.

IMO the dollar is in the drivers seat in terms of the stock market, the market is largely repsonding to the dollar.

Dollar goes down, market goes up, dollar goes up, market goes down.

The world is so short the dollar now one of the great axioms of trading now is in play.

Any trade that one sided is what eventually drives markets.

When the whole world is short the dollar, who's left to sell the dollar?

No one and so eventually prior to the collapse of the dollar you will see epic surges in the dollar, as the shorts have to cover, they are forced to buy dollars.

The dollar going up makes dollars more valuable and stocks priced in them all else being equal fall.

So if you're looking for a market hint, IMO watch the dollar, it's at crucial levels around here, it'll either punch through to the downside or react rather sharply up from short covering.

Yes, but is the dollar's fluctuation the disease, or simply one of the symptoms? It's hard to use this knowledge unless you know what is driving the bus.

We are in a hugely deflationary period of time (plummeting house prices & CRE, high unemployment, etc.) while observing highly inflationary events (the massive injections of liquidity, big jumps in commodity pricing, etc.). It is like the bulls and the bears have battled to a draw.

To me the closest analogy is that we are trapped in a room full of dynamite and spilled gasoline, and everyone in the room has a sparkler and a squirt gun. Everytime someone tries to light a fuse, there's someone there to put it right out. This can go on for quite some time, but eventually the gas fumes are going to reach a critical level and Boom! - the whole thing goes up in smoke.

This too is not investment advice but more along the lines of commentary. If I was to offer my advice, I'd say to keep a close eye on everything and have trailing stops put in place to protect whatever gains you might have, and that this is a time to make many small gains and protect them as opposed to trying to hit those 10-bagger's that were seemingly everywhere a couple of years ago.

JTS

 

[conraddobler]

Yes, but is the dollar's fluctuation the disease, or simply one of the symptoms? It's hard to use this knowledge unless you know what is driving the bus.

We are in a hugely deflationary period of time (plummeting house prices & CRE, high unemployment, etc.) while observing highly inflationary events (the massive injections of liquidity, big jumps in commodity pricing, etc.). It is like the bulls and the bears have battled to a draw.

To me the closest analogy is that we are trapped in a room full of dynamite and spilled gasoline, and everyone in the room has a sparkler and a squirt gun. Everytime someone tries to light a fuse, there's someone there to put it right out. This can go on for quite some time, but eventually the gas fumes are going to reach a critical level and Boom! - the whole thing goes up in smoke.

This too is not investment advice but more along the lines of commentary. If I was to offer my advice, I'd say to keep a close eye on everything and have trailing stops put in place to protect whatever gains you might have, and that this is a time to make many small gains and protect them as opposed to trying to hit those 10-bagger's that were seemingly everywhere a couple of years ago.

JTS

Good advice.

I will just say that while I've been jumping back and forth on the deflation inflation thing, ultimately the amount of deleveraging that has to happen has me thinking they'll never inject that much cash, at least not until they have to.

All along the way people will bet on inflation, and we'll see some of that, IMO mostly in goods like food.

Depressions like this are largely characterized by a re-ordering of priorities, ie the food part of the average persons budget might quadruple or more while the housing part might fall by a quarter.

If something is bought with cash and not usually credit it should rise in price, if something is typically bought with credit, ie cars and houses, they should fall in price.

Finally if it's needed it will rise, if you can do without it, then it will fall JMO, not investment advice.