Speaking in Orlando

Vacation is really a misnomer. This is more like a re-location but I'll be in Orlando starting this evening. Friday, I am speaking at the AAII conference and doing the requisite Barron's related schmoozing.

Otherwise, the family is coming with me to the House of Mouse for some time away. I'm still doing the newsletter but I've done it poolside at midnight many times before. Anything for the kindeleh.

Marketwise, liquidity is the rule. G-20 is promising it so the stock market has wings. Broken wings, but wings nonetheless. I just worry about what happens when the economy hints that it can handle a rate increase.

As they say in the bond biz, all of this product (stocks) has not been put away (sold to the final retail buyer). That leaves it is very big, fast acting hands and facing a crowded exit door.

Greenback is Whack

NEW YORK (MarketWatch) -- The dollar weakened Monday, pushing an index of the greenback to the lowest in 15 months, after a weekend meeting of Group of 20 policy makers offered no support for the U.S. unit.

Why would other countries support a strong (insert your own currency here) policy? Nobody wants their own currency to soar. Of course, unless you have your eye on buying chunks of your neighbor instead of selling them things.

Let me offer a different spin on why the dollar plunged to open the week - healthcare reform passed the House. Spend, spend, spend.

The Senate has vowed to kill it so let's see if the dollar reverses course at that time.

In the meantime, gold....... If you have not already seen it, take a look at our Chart of the Day at QuickTakesPro.com.

Classic pattern?

This is a chart we've been watching in Quick Takes Pro. If you have any faith left in technical analysis than a channel breakdown with falling-volume retracement should mean something.

chart printed at 1pm NYT Friday.

Solar Winds are Blowing

There was an interesting discussion this week in a technical analysis chat room. First, read this quote from a post by Philip J. McDonnell.

"There is a large hole in the Sun's Corona which is emitting solar wind in our general direction. It should reach Earth on Friday Nov. 6. The chance of geomagnetic storm activity is now at 30% in high latitudes and 15% at mid latitudes."

This is not fiction but real science. What may be construed as fiction, although it is not, is the connection it has to the stock market. McDonnell then posted an abstract to the Atlanta Fed's study on this topic. I have excerpted it here.

Playing the Field: Geomagnetic Storms and the Stock Market
Anna Krivelyova, Boston College
Cesare Robotti, Federal Reserve Bank of Atlanta

A large body of psychological research has shown that geomagnetic storms have a profound effect on people's moods, and, in turn, people's moods have been found to be related to human behavior, judgments and decisions about risk. An important finding of this literature is that people often attribute their feelings and emotions to the wrong source, leading to incorrect judgments. Specifically, people affected by geomagnetic storms may be more inclined to sell stocks on stormy days because they incorrectly attribute their bad mood to negative economic prospects rather than bad environmental conditions.

This paper provides evidence of substantially higher returns around the world during periods of quiet geomagnetic activity.

Interesting. The conclusion is that you might want to take a little off the table today.

Ben'd Over Greenback

The dollar has actually had a trendline breakout in recent days and after pausing for a bit it had its rally cap on Tuesday. It did not last. And today when Ben and Co. said they were going to hold rates for the next 137 years (or until Chase refunds my fees) the dollar just simply tanked.

What is more fun is that gold is soaring while silver, though up, is far from new highs. Ditto platinum and copper.

Me thinks the market does not like the Fed's attitude.

When the chips are down buy a railroad

This chart really does not need much in the way of captions.

The key semiconductor index has very clearly broken down and is underperforming in a down market. That means it is falling more than the S&P 500 and that is not what happens in a bull market. So what does the Oracle do?

Why he plays monopoly and buys himself a railroad! You can make your own comments on why today and not a few months ago when he first started to talk up the economy. I smell Goldman Sachs.

The media made a big deal out of Buffet going "all in" on the economy with this move at this time at this price. Again, why wait until now when he was "all in" months ago? Is it really a bet on the economy? Maybe it was a patriotic move so that a key cog in the infrastructure does not fall into foreign hands thanks to the dollar.

Or was it financial engineering as he buys now and pays later with depreciated currency or assets? That's not a bet on the economy is it?

Who am I to question the wisdom of this move. He is the man, not me. What I question is the nonsense that he is betting on the economy. He is betting on Warren Buffet (I would too) and nothing more.

Crash!

No, not the stock market but my computer. Old Bucket O'Bolts finally keeled over and I had to run backups today. Most of my stuff was already backed up to an external drive so inconvenience, not catastrophe. By the way, it was a Dell I bought in 2001 or 2002, complete with Word 2000. Can't say the same about Mac hardware from Macs down to iPods. Too bad Dells have to come with Evil Empire software. At least I won't have to get Vista.

As for the market, another day, another rejection. Last week, we had a little bit of panic and the next day it zoomed higher. Ditto for Friday and today. While I make my case for a negative market in my column today one thing I can say in favor of the bulls is that the market did not crash today. Given what happened last week, the extent of the rally on lousy fundie outlook and crap-o volume it was rather comforting from a citizen's point of view to see China rebounding higher overnight and premarket futures a bit higher than flatline.

So, the rally is over. That does not mean the next stop is major lows but for now it is time to enjoy the profits you made. My regret is getting whippy dipped (that's atechnical term) out of my long in the GDX gold miners ETF. We bought the open Thursday and had to stop out Friday.