Thursday, August 27, 2009

Gold In Compression

3 comments:

dave said...

I have never bought into this widely held idea that the USDollar was bottoming as i indicated previously in comments under "Triangle In Ford" several weeks ago.

I especially couldn't understand how a "dramatic" move up in the Dollar fit in with your very bullish intermediate-term stk mkt views.

R. Craig Pritchard said...

This morning the commentary on CNBC was that everything is a currency trade, the implication being that stocks and commodities will continue to go up as long as the dollar keeps going down.

However, the error in logic here is that correlations between asset classes are not set in concrete. Looking back over the last 4 years, there have been periods when stocks and the dollar went up together, which may very well happen now.

I don't know if the dollar is putting in a mult-month bottom as Prechter and others are arguing, although it looks probable, but we should never lose sight of the fact that we have to analyze each market on its own merits. Intermarket analysis is often very helpful, but relationships do change.

dave said...

"...but relationships do change."

Obviously, but there's no evidence of that yet.