There are numerous signs that we are fast approaching a major market top and that a low has already been put in in the dollar.
Put/call ratio. Daily Sentiment Index. Investor Intelligence Advisors' Survey. All show major extremes in bullish sentiment towards stocks. Volume is weak, breadth and momentum waning.
Add to this the non confirmation of recent stock index highs by the USD index which bottomed at the beginning of the month amidst extreme bearish sentiment (97% bears!!!)
China...one of the "recovery" drivers has already topped out and private speculators have vast hoards of commodities stockpiled which now overhang the market.
Credit creation is still in reverse, other than government debt, so that $52 Trillion debt balloon in the US still has a leak and now that the stimulative measures have been absorbed (first by asset price spikes and then slowly, inexorably sucked into the black hole of the credit implosion ) it may be time for another round of creditors demanding payment and debtors selling everything they can in order to raise the cash.
I am fearful already, will the crowd be joining me?
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Quite a good write up on the dollar in the chronic today .
http://www.investorschronicle.co.uk/Tips/Buy/CityTrades/article/20090826/f42b8b74-9245-11de-aa4a-0015171400aa/A-contrarian-currency-bet.jsp
I'm quite bullish on the dollar in the near term but much less apprehensive on equities - we are due a correction of sorts but I suspect most investors have already factored that into their outlook.
Prices move in search of volume, I wonder if there are enough buyers holding off for better prices to make things go down hard in search of stops.
I could see a serious sell off being psychologically damaging, affecting economic activity and a vicious cycle being entered. I think prices very vulnerable here.
Interesting how precious metals are reacting to dollar strength...they are up. Which looks like fear.
An alternative view... http://ftalphaville.ft.com/blog/2009/09/03/69851/the-renminbi-black-swan/