Market Commentary

Market Commentary:

Today, the dollar rallied and the stock market finished mixed with weakness in the NYSE and the Russell 2000, with a small uptick in the OTC indexes and a fair showing in the DOW. The S&P 500 was up one point.

There is very little volume today so investors aren’t excited about this market and the “huge carry trade” policies of the Fed.

President Obama is getting an ear full from the Chinese who are upset the US Federal Reserve is fueling “speculative investments” by cheapening the dollar, known as the carry trade or inflating its speculative assets through its loose monetary policies, which is forcing countries like China to adjust its monetary policies to hedge against a plunging dollar environment by accumulating commodities such as crude oil futures.

This, the Chinese believe is posing “real and insurmountable risks” to the global economic recovery.

http://www.ft.com/cms/s/0/85f1fac2-d1dc-11de-a0f0-00144feabdc0.html

As investors we have to watch closely as to what comes out of these meetings with China and especially whether China is willing to let their currency trade freely and apart from pegging it below the US dollar.

The Fed is playing with fire, perhaps to force the Chinese to trade more fairly with its currency peg relative to the dollar, but with oil prices at $80 a barrel, signs of stress are clearly being manifest.

Today it was announced that mortgage delinquencies hit another record in 3Q and that 6.25 percent of U.S. mortgage loans were 60 or more days past due, according to credit reporting agency TransUnion.

http://apnews.myway.com/article/20091117/D9C18RSG4.html

Yet, no one is talking about $80 oil as a contributing factor as to why mortgage delinquencies are hitting new records. But the strain of $3+ gasoline in many parts of the country, especially in California where people have to drive rather long distances to get to work is a killer.

This administration knows perfectly why oil prices are this high and it is because of the dollar carry trade and their policies of continually undercutting the dollar. To campaign on change and then proceed to undercut the dollar and drive up oil prices again may make the Saudis happy but it is going to make renters out of most Americans.

Already 47% of Americans pay no income tax. Imagine that, half of all Americans are essentially in poverty and on welfare.

http://www.zerohedge.com/article/5-us-taxpayers-account-606-all-tax-revenue-47-will-pay-no-federal-tax-2009

The following video is well worth listening to.

Visit msnbc.com for Breaking News, World News, and News about the Economy

Yet, at the same time we seem to have found support technically at the middle Bollinger Band line on an intermediate-term basis and appear to be setting up for an intermediate-term end of the year advance. But any intermediate term advance will depend on a big plunge in the dollar to sustain an intermediate term advance in stock into the end of the year. I am not sure the Fed really wants to drive oil prices into the end of the year but it is hard to understand the mind of Bernanke and Geithner.

In any case, a minor pullback is due to allow the short cycles to correct but don’t expect much of a pullback as intermediate term cycles are attempting to advance for a few weeks. Then that should be it for this cyclical bull cycle.

Meanwhile, the long-term cycles are now once again very overbought, with the monthly stochastics back over 92% on %K on the stochastics suggesting we are coming to the end soon for this Fed induced cyclical bull market unsupported by true fundamentals.

Remain largely defensive.