Dollar:
I’m going to start off with the dollar. Today’s close above 76 seems to leave little doubt that the dollar has now put in an intermediate term bottom and is progressing in what will likely be a sharp but brief counter trend move. I’ve noted on the chart that the dollar has now broken out of the 5 ½ month trend channel it’s been in. I expect this rally will continue till the buck reaches one of the next two significant resistance levels at either 79 or 80. I would give 79 about 90% odds maybe a little less for 80. I really doubt the dollar is going to rally over 80 though. Every hedge fund in the world will be selling at that price and I expect by that time Bernanke will be in full on panic mode and printing like a madman. In the meantime the dollar is starting to get short term overbought and probably due for some kind of short term correction. Stocks: With that in mind most of the resource stocks are also short term oversold and showing Bollinger Band crash trade signals. New subscribers can find the definition of the Bollinger band crash trade and VTO trade in the terminology document on the website. You get the picture. A lot of stuff is extremely oversold right now and probably due for at least a day or two bounce. Once the 3 day RSI moves back out of oversold levels I will put the rest of my position on in OIH. Breadth: Our two breadth indicators have rolled over again. There’s a pretty good chance the top is in for this intermediate term rally and we should start working our way down into a final low due later this month or early January. Short term indicators are still neutral. Gary www.garyscommonsense.blogspot.com
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