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thoughts on markets & cetera – christopher carolan

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Dollar Yen – The Key to Commodities – II

July 8th, 2008 at 6:12pm · No Comments

Last week I wrote about the dollar strengthening against the yen as the key to popping the commodity bubble. That post showed monthly and weekly charts of dollar yen. Here’s a daily chart of dollar yen showing the dollar’s move up today through it’s buy signal net line.

 

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click chart to enlarge

And here’s today’s oil drop – which may or may not signal an important top in place. This oil bull has had a series of sharp two to five day declines that have punctuated the length of the rally.

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click chart to enlarge

This oil weakness is, in part, a signal of economic weakness, as evidenced by the strength in the bond market today. Here’s a weekly chart of bonds suggesting that another intermediate-term decline in rates is underway. If bond prices maintain these levels through Friday, then the weekly cycle-trap indicator will turn up. This is very bearish for the economy and consistent with my outlook for continued ‘economic winter’ conditions prevailing in the financial markets.

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click chart to enlarge

Tags: Bonds · Crude Oil · General Market Commentary · The Long Wave · Yen

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