the TREND letter's blog

The process of de-leveraging has to continue."

The August 29th issue of the TREND letter has been sent to subscribers via email.

There is a very interesting pattern shift happening with the US dollar and gold. Previously, gold would act in an inverse manner to the US dollar, meaning that if the US dollar was declining, gold would rise. On the following chart we demonstrate this pattern in the blue box. In that box we can see how as the US dollar started its massive decline, gold moved in an uptrend. Then in 2008, the dollar rallied strongly while gold declined.

The August 22nd Flash Rpeort has been sent to subscribers.

Here is an epiphany for those still clamoring to stimulate consumer spending: people who are over-extended on credit and under-employed, or unemployed, do not do a lot of shopping.

America's job market stats provide the catalyst for a secular shift down in retail sales:
-- Over 8 million jobs have been lost since the recession "officially" began in December 2007.
-- 14.6 million Americans are out of work. It will take several years to replace the jobs that are now missing.
-- 6.6 million Americans have been out of work six months or longer.

What really makes us nervous in this market is that we see a lot of risk in the markets right now, but we do not see that reflected in the VIX volatility index. As we can see on the following chart, the VIX index is declining, meaning that investors are becoming more and more risk tolerant, which to us is a dangerous stance in this current market.  

The August 8, 2010 Flash Report has been sent to subscribers.

Volume is one of the rare technical gauges that can actually help us get ahead of the curve a bit. We always look at volume as one of the most important barometers. It s worthwhile to note that volume in the stock rally off the March 2009 lows began to wane a few months in and by last June was showing more selling pressure on up days than buying pressure. Only on down days did volume pick up. Interestingly while markets rebounded from June 2010 losses in July, the volume of buyers hit a fresh low. Lasting gains need a steady stream of new buyers and believers to sustain.