[tippy]

I can give you my theory. Not sure if I'm correct, but this is how I see it. Once you go through the book you will find that each of the markets don't move exactly in sync. There are lags. Sometimes the effects from the other markets don't show up immediately.

Go back and look at the stock market in late summer. It should have rolled over. The ONLY thing that saved the market was that 50 point cut by the Fed. Even given the 50 point cut, the market barely even made a new high. If the FED had stood pat, we wouldn't be anywhere near 14000. We also wouldn't be anywhere near 1.44 in the EURO and likely gold wouldn't be anywhere near $800. Look at each of those markets from the day of the cut on August 17.

Secondly, the effect of the weak dollar isn't felt in the stock market until commodities reach the point where inflation becomes a factor. As of present, inflation isn't a foremost concern of the FED or the stock market. You are in that dead lag time when one of your markets (stocks) is out of whack. I personally think the stock market is the market that is out of whack and is due for a fall. I could be wrong. Once a weak dollar gets to the point where it pushes commmodities to a point where inflation becomes a concern, then the FED has to think about raising rates and that will be the final bullet that kills the stock market.

So far we have been lucky and the weak dollar hasn't pushed commodities to the point where inflation has become dangerous, like we had in the 70's-80's. I think it is coming though. Gold is a leading indicator of inflation and it is pressing $800. It shouldn't be long until the rest of the commodities catch up. Most of the commodity stocks are up today, which suggests that commodities will continue to rise. Also, with oil at $90 we will see gas go up soon. For whatever reason inflation hasn't shown up at gas pump prices given the huge run up in oil prices. Lag time.

Also take a look at what is happing overseas. I believe just this morning Germany showed a CPI higher than expected. Inlation is more of a concern overseas, but it should reach us soon.

Of course I could be wrong. By the way I added another bullet to my dollar position at 1.4420, so I hope I'm not wrong, LOL. Average position now at 1.4401.