201012.19
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Weekly Chart Review

The dollar has held above the 50 day MA which is now rising. Consensus is still skeptical of a sustained dollar rally. I say it depends on policy. If policy improves - and it has at the margin - the dollar will too. Further follow through probably requires further improvement in policy.

The dollar has held above the 50 day MA which is now rising. Consensus is still skeptical of a sustained dollar rally. I say it depends on policy. If policy improves - and it has at the margin - the dollar will too. Further follow through probably requires further improvement in policy.

Just to review again; the dollar appears to have bottomed in early 2008. I know that isn't the story you're hearing from the rest of the investment establishment, but it does have the benefit of being true. First target is that 38.2% Fibonnaci retracement around 90.

Just to review again; the dollar appears to have bottomed in early 2008. I know that isn't the story you're hearing from the rest of the investment establishment, but it does have the benefit of being true. First target is that 38.2% Fibonnaci retracement around 90.

For now the rally in gold shares continues but if that dollar uptrend continues this trend may be a casualty.

For now the rally in gold shares continues but if that dollar uptrend continues this trend may be a casualty.

The same applies to the metal. This is looking more and more like a big old top. I've got stops at the 12.8 level.

The same applies to the metal. This is looking more and more like a big old top. I've got stops at the 12.8 level.

A better performing dollar also means less inflation in Asia where so many currencies are linked to the US dollar. I closed our position in the Asian real estate etf last week. It was a very profitable investment but it is time to move on.

A better performing dollar also means less inflation in Asia where so many currencies are linked to the US dollar. I closed our position in the Asian real estate etf last week. It was a very profitable investment but it is time to move on.

The ten year Treasury yield hit the downtrending 200 week moving average last week and pulled back. Will yields eventually break the downtrend? I think so but not in a straight line.

The ten year Treasury yield hit the downtrending 200 week moving average last week and pulled back. Will yields eventually break the downtrend? I think so but not in a straight line.

The pullback in the ten year yield meant a nice bond market rally at the end of the week. I do not expect it to break the downtrend line. I would be a seller of further rallies.

The pullback in the ten year yield meant a nice bond market rally at the end of the week. I do not expect it to break the downtrend line. I would be a seller of further rallies.

High yield has been the best performing part of the bond market during the correction. I think upside is limited though. Default rates won't improve much and it will be hard to narrow spreads any more.

High yield has been the best performing part of the bond market during the correction. I think upside is limited though. Default rates won't improve much and it will be hard to narrow spreads any more.

High grade corporates haven't fared as well and eventually I expect the high yield chart to start looking like this one. For now LQD is oversold but any rally should be capped by the 50 day MA.

High grade corporates haven't fared as well and eventually I expect the high yield chart to start looking like this one. For now LQD is oversold but any rally should be capped by the 50 day MA.

The inverse bond ETF we highlighted a few weeks back pulled back as bonds rallied but the uptrend is still intact.

The inverse bond ETF we highlighted a few weeks back pulled back as bonds rallied but the uptrend is still intact.

The Chile ETF made another new high last week. I am still long but I took some profits last week. Chile moves with copper so keep an eye on copper prices.

The Chile ETF made another new high last week. I am still long but I took some profits last week. Chile moves with copper so keep an eye on copper prices.

I took some profits in Peru as well.

I took some profits in Peru as well.

Emerging markets still look tired. I become less interested every time I hear some talking head on CNBC talk about the wonders of investing in countries they can't find with Google earth.

Emerging markets still look tired. I become less interested every time I hear some talking head on CNBC talk about the wonders of investing in countries they can't find with Google earth.

If you feel a need to be in emerging markets, Eastern European markets still look more interesting to me than the mainstream China/Latin America markets that everyone else is talking up.

If you feel a need to be in emerging markets, Eastern European markets still look more interesting to me than the mainstream China/Latin America markets that everyone else is talking up.

I sold out our position in the Latin American ETF last week.

I sold out our position in the Latin American ETF last week.

I highlighted Biotechs just last week but the action demands another look. The group is still cheap fundamentally.

I highlighted Biotechs just last week but the action demands another look. The group is still cheap fundamentally.

I posted this chart a few weeks ago too. Homebuilder stocks act well. Is it the bottom? Heck, I don't know but the downside would seem to be pretty limited.

I posted this chart a few weeks ago too. Homebuilder stocks act well. Is it the bottom? Heck, I don't know but the downside would seem to be pretty limited.

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