Thursday, September 3, 2009

Gold Rallies, Silver Rallies, Stocks Rally and the Dollar Rallies

I have been sick, I have not posted. I will post some charts later. However, I did want to get this out.

Well, that is an interesting setup. As I have discussed in previous posts I expect the dollar to be stable relative to rallies in inflation assets. That does not mean that the dollar will not go down. But does mean that it will show relative strength...and that this Gold and Silver trade is NOT an inflation (hyper-inflation according to Peter Schiff) trade.

Strength in the dollar definitely confirms that this is not a market to rely on for long trades. Sit on hands would definitely be more profitable than getting trapped. Ideally, I would like to see the market move up more to truly convince the inflation camp - that means that anything under 1039 is fine with me. But what I anticipate is that the market makes a move up to the 1015 area and gold make its sharp jump - and then both fall out of bed.

In the chart below, you can see the wave count and the proper channel for the dollar. Just in case you are wondering, the "End of Bear Trend" indicator is automatic not manual. Its based on some of my recent programming work. The interesting thing is that this indication usually only presents itself prior to or in wave 5. Twice is much better than once - with support at 77.84. If we were make another low that would be allowable and a huge buying opportunity based on this indicator alone.

Be forewarned, the dollar's strength will bely any strength in inflation assets. The trap is set.

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