IF .... XAO drifts sideways next week then the lower half of the error channel is likely to be explored down below 4400.
IF XAO retests 4800+ (short term confidence) look for a similar backtest within the next 3 weeks of 4600+, and perhaps a full channel failure through 4600 for those intent on pulling their money (can't see this happening yet - might be too early IMO, economies are yet to find their feet).
I base this on the magnitudes of widespread capital raising that has occured since Mar09. Some institutions have sonce gone back for a second round. Cap raising dies if the equity market dies - Q.E.D inefficient/struggling listed companies faila and jobs are lost. Who needs this to happen now?
The coals are still increasing in reportable consumption We have winter energy demands upon us Consumer sentiment is wavering, but they'll need to keep warm and fed so maybe they have saved their spendings Steel industry still hasn't kicked back into gear yet The gov't stimuli globally has worked effictively so far
If the US (and indeed the northern hemisphere) can survive winter and wake up at the end of January 2010 in tact, we've aborted disaster.
But a loooong way to go before that.
The dollar? No idea really as it's more gut instinct, but I see it drifting sideways in the 74's for a short while. When jobs safety becomes universally established and the quantum of all the false accounting by US financials comes to light (IF IT DOES), then the USD might gain some credibility back, IMO. Any lower and many countries will intervene on the rate market anyhow.
There isn't a broom big enough to sweep up the failings of the US, but I sincerely hope Obama perseveres to tidy the place up and hang a few corpses out as examples. I'll stop short of being sympathetic, but seriously, what this US government inherited from dubya years would have been nothing short of a toxic and septic wasteland.
