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Sunday, October 25, 2009

USD vs Equities


1.4967 to 1.4973 will be a sticky area to break through, but if it's taken by the Bears this could very well collapse through 149.00, and we all know what that will lead to.

I'm generally not a fundamental thinker, but I'd like to ask YOU my reader this question. Come on, please take a minute, and tell me what you think. If you don't want it to be public e-mail me at kumobob@sbcglobal.net. I can't believe how I get over 100 readers and about 50 who return in a day and nobody comments.

OK here's the question. With the USA spending like there is no limit, what on earth is going to turn the dollar, and consequently the stock market? Are other countries in worse fiscal shape than the USA? What will cause the USD to become strong and bring the equities down?

I'm wondering, will the equities market will divest itself from the USD? Maybe if the majority stockholders of the S&P500 are made up of people outside of the USA, well maybe they will no longer be looked at as American companies where the dollar is it's base of value.

I've been pondering this question for sometime now, and really would like to understand how in the world the S&P500 will fall while the USD continues to propagate like rabbits from a printing press. I mean to say the Fed is creating more dollars, and loaning it to us faster than the printing presses can print thousand dollar bills.

Will it will be the bond market that finally says no? Will the world just refuse at some point to buy our stinking loans? I'd really like to hear your ideas. I think it may become a very interesting discussion.

A friend sent me this chart..


Analysis presented on this Blog has only informational, and educational purpose, and does not represent a proposal for buying or selling currency contracts.

4 comments:

  1. The FED, it only has to come out and signal that it will start looking at the prospects of rate increases before years end. :)

    ReplyDelete
  2. Great question. Wish I had the answer for that. I'll let someone much smarter than me figure that out. I'm just a pattern trader and enjoy your kumo charts.

    Best to yours,
    HD

    ReplyDelete
  3. I think the when the DOW, the dollar goes up, this is just the 'natural' way the market works, imo.

    I think ^VIX is pretty good at signaling market sentiment and the DOW (which is probably headed down for a bit now)

    ReplyDelete
  4. "when the DOW goes down in value", rather.

    ReplyDelete

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