2009

June 15, 2009 · Posted in Weekly Posts · Comment

Last week was sloppy and this week looks to have more fo the same. Commodities, gold, and stocks ended the week down after rises in the dollar. The dollar is up this morning in pre-market and overseas action as the Russian Finance Minister is seeking to talk the dollar’s fundamentals up. This is in contrast to statements other officials are making, including the Russian President. This is political. The BRICs are concerned that a dollar collapse may occur stranding their reserves in a damaged currency so while they diversify away fro the dollar and take steps to protect themselves they want to try and talk up the situation to avoid panic.

Watch their actions more than their words.

Everything looks set to start the week on a down note. Asia and Europe were down. Commodities and precious metals are down. Two things to specifically watch are the dollar and gold. The dollar is threatening the first down trend line. We will see in the next few days, maybe even today, if it violates it. If it does then the next down trend is the next resistance level we need to watch. Gold too is bobbing around in a region that we need to hold. If gold breaks much lower then we will begin to break the up-trend going back to last year. That would be bearish for gold.

US Dollar Index 06/12/2009

Gold 06/12/2009

As for the other commodities, we have key data coming out Wednesday and Thursday on CPI, PPI, and leading indicators. If these are positive as expected then look for commodities to continue on up as well as their producers.

For equity markets in general we are still in a consolidation range with a slight upward bias. Consolidation is good even if it means we have down days. We see the upward consolidation in the S&P and NYSE charts below. Note that the NYSE, the broader index, is consolidating below the previous high while the S&P is above that high. This to us is very bullish. It says the broader market is gathering real strength before the next move upwards. If you just consider the S&P you could be concerned because rising wedges like this can be bearish. Looking at the NYSE as well though paints a very bullish picture.

S&P 06/12/2009

NYSE 06/12/2009

As we have stated before, watch the Ag markets specifically the grains. All evidence emerging is that grain shortages are developing world wide. The futures prices have been on a steady march higher but we really haven’t seen the RJAs and DAGs of the world respond. We expect this to change.

Markets are headed higher.

We wrote recently in “The Character of the Dollar Collapse”:

Murdock Global Insight began discussing the dollar’s impending demise in January when the dollar was still generally strengthening How the US Dollar Will Lose Reserve Status. Now, in June, the idea that the dollar is destined for significantly lower levels at some point has entered the mainstream. The US fiscal position is increasingly being seen as untenable. Interest rates are surging for a variety of reasons but he massive debt issuance by the US is one primary cause. We have established the Murdock Strategic Portfolio for the purpose of growing our wealth in the face of a dollar collapse/surging China scenario The Strategic Portfolioand we have written about the risks that a free fall in the dollar could cause to those investments The Most Important Question Facing Investors.

To find out the details look at our strategic portfolio scorecard. The Strategic Portfolio is how we are investing in the global trend of dollar depreciation and Asian recovery and trading around that trend to ensure we stay profitable. Take advantage of the Free Two Week Trial and read it. We have also update the scorecard for today’s action.

The Strategic Portfolio

Portfolio Scorecard 06/12/2009

In addition, we strongly recommend reading The Most Important Question Facing Investors as today’s action illustrates directly what we are faced with if the dollar decline turns into a free-fall.

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The following additional posts are highly relevant:

The Strategic Portfolio

The Most Important Question Facing Investors

How the US Dollar Will Lose Reserve Status

Chinese Gold British Debt

Brazil

China Part 4 - Playing the Dragon

China Part 3 Global Hard Assets

China: Part 2 - Bonds, Dollars, and Inflation”.

“The Fed and The Bond Market - Will Intervention be Effective?”

“The Coming Bond Debacle”

Fundamental Trends