Today was pretty obvious. Everybody got it. Which is why the magnitude of today's move was so large. One salient point however, after the open the S&P rallied from 1196 to 1202, a respectable rally. The market came unglued when oil broke $50, a big resistance level on the charts. There was also big volume on this move down, a harbinger of things to come.
South Korea"s central bank making comments about diversifying reserves away from the dollar, knocked the buck down big. The euro closed at 1.3252, up .0178. This gave gold an $8 lift and of course gold stocks had a good day. Bonds did not like the reserve talk either and finished lower.
Oil inventory data and the CPI tommorrow could derail the market further. If the data support oil staying over $50 and the CPI keeps yields creeping higher, look for further downside followthrough, if not, a respite is in order. In my last comments, I said it was a strong possibility that the market had put in a double top and the combination of higher oil and rates was dangerous. I also said a couple of post's ago that if gold stocks moved higher rather than consolidating their gains, it may me a warning of trouble ahead. It looks like the latter is the case.
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I have added a number of blogs to my blogroll (see those that are in bold) that post on the USD and currencies in general. I have a feeling that we will all be wanting more information about the effects of a falling dollar on us personally over the coming years. I think that Gold will be considerably higher and in the 70's the price of Gold was higher than the Dow Jones Average. I believe the two will cross again and we all should have some dollars in this area for insurance. I do.
Mover Mike
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