Wednesday, November 25, 2009


Many of the market internals are now starting to flash warning signs. Despite moving to within a hairs breadth of making new highs yesterday many stocks have now dropped below their 50 day moving averages.

New highs/new lows are also collapsing.

The market is moving higher with fewer and fewer stocks participating.

And of course here is the reason the market is moving higher.

The Fed is trying to print our way to prosperity. It's never in history worked other than in the short term. It temporarily gave us a bubble in housing and credit during the 03-07 period. However I suspect most people if asked, would now say they would rather forego that party to avoid the hangover we are now experiencing.

The current leg down in the dollar is one of the longest in history. That means the chances of a counter trend rally are increasing every day. In the premarket this morning the dollar moved to within just a few points of that major support level at 74.31.

The danger of a significant bounce in the dollar and an intermediate level correction in all asset classes is increasing every day.