Stock Market Update - October 9, 2009

Money flow for the hourly charts has just now started to peak. We are now at one of the most important junctures in the stock market history. What is this thing going to do? A lot of it depends on the current direction of the dollar ... earnings PE ratio is still in the stratosphere for the S&P 500. If the dollar continues is slow descent downward ... which without intervention ... it will occur ... then commodities and stocks to a point will be the place to be. What could make things even worse for the dollar is if OPEC and Russia decided to delink the price of oil from the dollar ... then watch out ... no one would be wanting to hold dollars anymore and they would not have a reason to hold them for that matter.

The money flow could bounce around the top of the cycle here before moving back down. I would be careful to short here ... generally money has one more trip down and then back up before the primary indicator (green line) will roll over and start its move down. What I was saying about the market being at an important juncture was that if the market does not make a new high ... see both the hourly chart and the daily chart ... then we could see the seasonal high being made in September. We will just have to wait and see ... again a lot is going to depend on the dollar.


Money flow for the daily chart is moving back up ... we still have a ways to go before it tops. See comments above about the hourly money flow. Friday we did have money flowing into the broader market as just over $700 million and the NYSE posted a 59% up volume day.

Is this a small double bottom here for the dollar? We will just have to wait and see. If you can figure out the direction of the dollar ... then you have the current formula for the direction of the equities and commodities markets.

As long as the dollar heads lower ... then gold has only one way to go and that is up.