Aug 10, 2010

Dollar rose dramatically before FOMC decision pulling down all markets and other currencies. Then fell back after FOMC decision where they announced they will monetize Treasury debt as mortgage debt is paid down. Really a very minor decision – they’ve been monetizing debt all year – but it does show how uncertain markets are.

Short-term: 2 yellow, 2 red – tending yellow/red
Intermediate-term: 4 yellow – tending yellow
Stock targets: 65% swimming, 24% neutral, 11% sinking

Expect serious choppiness and pullback this week. I don’t think this is the top — more like an options expiration whoosh down before the indexes make a final attempt to break thru resistance (which they still haven’t done in any convincing way). But I suspect it is now too late. Bulls are out of ammo. And bears come back from summer vacation soon.

All currencies have corrected their overbought conditions. Yen is the currency for safe haven. A$ is the currency bet for a recovery. Euro and pound will likely resume uptrend (though maybe choppier from here – esp for pound). Franc and C$ are the weaker of this group. US$ is still garbage – and FOMC statement just confirmed that. Gold is still overbought more than it is “strong” from here — but I don’t see much downside either and I am still more bullish long-term for gold than any other currency.

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