09 October 2008

The Progress of the Dollar Rally in Context and the Stock Market Crash

This is a simple update of the chart which was posted on this blog on 8 September Dollar Musings and the Potential for a Significant Stock Market Decline.

We will take a minute to note this detail from that September 8 blog entry:

We think that there is a heightened chance of a significant stock market decline that will start in the next thirty days. As we have previously said we are watching for a 'failed rally' hall mark in our model, We are almost there.

A likely target for clarification will be around the week of this month's option expiration on 20 September.

The clarification was a market decline that started on 19 September and has shaved around thirty percent off the major US stock market indices.

The dollar did drop back into the 70's and then has rallied sharply back up to resistance around 82.

All of our charting indicates that the dollar will not significantly top the 61.8 fibo level of 84.37 if it does surmount the resistance at 82.

If it does, then we need to reconsider this as something other than a bear market rally.