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September 28, 2009

Awaiting Confirmation

For the 6th time in 11 sessions, the dollar index met resistance at the 77 level. Tomorrow should prove to be pivotal. Either 77 will reject price firmly or the buck will finally manage a close above this elusive level. Despite the quarter-percent gain in the buck, equity indexes posted 1-2% gains. Silver gained a percent, as well, though gold was flat. You can see why I've been awaiting further confirmation of the dollar counter-trend scenario before putting chips on the table.

s&p 500 index

Until these confirmation criteria are met, the Docfolio remains positioned to best benefit by a continued move higher in precious metals-related holdings. Since there is not much new to discuss, let's have a look at a few old friends and see what information can be gleaned.

banking index

Despite new highs in the general market, the bank index has not managed to conquer the historically-important pivot at 48. Since these institutions are the recipients of most of the stolen tax dollars being pumped by the Fed, they should continue to lead if the rally still had legs.

baltic dry index

The weakness in shipping is not a good sign for oil prices nor for stocks.

gold mining shares

If gold and silver were about to surge higher, mining shares should be leading the way by quickly bouncing out of near-term oversold. Instead, they posted a bearish candle.

As you can gather, there are numerous pitfalls for the bull case. For the moment these are all simply warning signs. However, when confirmation bells start to get rung, the Docfolio will quickly change structure.


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