Monday Morning

Oil, Gold, Silver saw big gains in pre-market trading over the weekend, with Oil trading as high as 106.95 before rumors of Gadaffi making a peace gesture to the rebels..  Oil is currently trading up on the day at 105.  Gold is higher at 1438.90 and Silver is up at 36.42.  Anyone want to guess where the Dollar is trading?  If you guessed lower, you would be right.  Dollar is off, trading at 76.30, while the Euro is strong, trading at 1.4008.  Every trading site I looked at over the week end is commenting on the Trend support line that the Dollar has violated, and talk is about the collapse of the Dollar, not the pending collapse, or the imminent collapse of the Dollar, rather the Collapse of the Dollar.  Even Greenspan is talking about the flight of investment capital into PM's

The Commodity complex is again strong, with Cotton leading the way.  The domestic debt market is weak, with the 10 year Note trading off 1/2 at 3.54% and the Bond off 5/8 at 4.64.

The Dow opened strong, gaping up nearly 50 points and trading up 70 at 10:00am before pulling back, currently up 20.  The SPX also opened higher, trading up 3.40 points, currently trading up 1.41.  The rest of the major indexes are all trading lower,  led by the Transports which are trading 0.35% lower.  I can't find the news that triggered the recent sell off, but but the time I get this posted, I am sure the reason will be clear.

There is news this morning that Fed FOMC members are now openly debating whether or not QE11 should be halted, with all the good news on the economy last week. The rumors of a QE3 are also being challenged.

I read an interesting comment at Slope of Hope this morning, describing the kinds of markets identified with advancing or declining Dollar. 

#1) When the dollar and stocks are both up, we are in a true bull market with a healthy, strong economy (** note that this has not happened for years now). 
#2) When the dollar is down and stocks are up, we are in a "fake" bull market (see years 2003-2007 and the current market).  In this scenario, equities are rising only because the dollar is falling and exports become cheaper, but it is not really healthy and/or sustainable.
#3) When the dollar is rising and equities are falling, we are experiencing deflation (note that May 2010 was a highly volatile, deflationary move).  Deflationary moves are very trade-able for short term bears and are usually reflected by declining bond yields.
#4) When the US Dollar falls and equities fall together, the "game is basically over".  The market period from year 2001 to 2003 is a technical example of this scenario. 

A  tip of the hat to facesincabs.....good stuff!

It looks like Mr Market is setting us up for another whipsaw...... I would love to get a Buy signal so I could BTFD, as it seems that is the only trade generating profits.  I know a few other bloggers are getting tired of these whipsaws!  But I will stay with the latest trades until they get stopped out or they generate a profit.  The momentum again this morning is still Bearish, despite the late Friday afternoon rally and this morning's quick 70 point gain. As this post is completed, the Dow is up 30 points, , while the rest of the indexes are mixed.


Best to Your Trading!


Bill