We live in interesting times ... I don't know about 18 days but...

We live in interesting times ... I don't know about 18 days but a look at all the charts in one fell swoop would do you some good.

Jim says - The countdown is to a point where it is clear that confidence in the US dollar has reached a point of no fast or meaningful return. There are 18 days left, and it certainly looks like what has been anticipated in time cycle is in FACT happening.

and he may be right - the warning to everyone is what gets hit, how hard and when. see below, starting with our local front yard. now some of this might appear to be astrology with the lining up of the stars - but it's worth describing what is happening right now.

XAO - take a look at the 3 green support lines I've dragged over from previous Oct2005 period. Which showed a half channel correction at about this point in time, at these values.



What's interesting is this is also the value of XAO in Oct 2008 (12 months ago), the trend in stochastics is showing a similar pattern of buildup from preGFC at end of Oct2007 - but in a downward trend at the time.

So we have recovered to the same ranges of 2008 - will it keep building or fail?

US TREASURY BOND YIELDS
12 months ago, treasury bond yields were heading south, from similar values as measured this month



Have applied polynomial regression (line of best fit) to the yields as attached above, to highlight the trend.

It might be positive that there is less volatility in the yields, and the current rate of change more gradual (but still on it's way down)

USD INDEX
The USD index is at the same value at the same time preGFC, and heading south to 71cents after a period of rallying leading into Xmas2007.



This pattern might be repeated in the near term. Nothing really suggests that the dollar is going to magically recover.

GOLD (USD)
The only thing not lining in value is gold. Has had a similar pattern of buildup though, but is sitting USD$200 higher at USD$1050.



In the period of Xmas2007, gold consolidated while the USD rallied; then gold and the USD parted company for 3 months.
(see Jan2008 to Mar2008 in both charts)

SPY for fun - it too is at the resitance level that is the gap in the sharp fall, in Oct2008 (12 months ago).



The superstitious ones have already decided the end of the world, or fainted.
______________________

SO WHAT?

Well, astrologically speaking, many stars have lined up ... and not just close, but immaculately. Where is the strength?

If I knew the answers to that, I'd have my own website ... BUT this might (just might) be a currency market meltdown. I suggest watching the following indicators (below).
(Try watching without panicing - this may take a month to form a direction)

IMO - it really depends on how much liquity major currencies have to ride this out. AUD? Seems pretty rock solid locally - but foreign trade is presently buoyant for the aussie.

Maybe the industrials are kept ticking over and currencies take a beating. Maybe commodities remain kings and we don't end up with a repeat of the GFC completely.

It's been said before, and it's well worth repeating. We live in interesting times. Be cautious, be concerned, but there's no need for panic. Seek financial advice if you need to (it will pay for itself right about now).

WATCH: XAO for ongoing signs of weakness. Not a half channel correction (because we a due one anyway). It may even be a full channel which is not a trend breaker.

if XAO downward trends don't break out upwards (for AUS locally) by end Nov09, then revisit your positions.

WATCH: $INDU and SPY - these seem to set the mood for XAO, and it's shouldn't have to (it just does). Similarly, they are trading in correction areas that again not trend breakers. Look for failure for these to correct at Nov09.

WATCH: $USD index for a rally, or even further deterioration. Gold should go to +$200 as it goes south. $1300 is not a mystical figure.

But the time you watch these above, you'll know where gold is going ....

IN SUMMARY
What do I think? More than ANY OTHER TIME IN INDUSTRIAL HISTORY are we seeing the possibility of countries other than the USA being capable of supporting global growth.

Like it or not, any sign of strength IMO is going to come from Asia, lead by China. You can whip it home, sit idly back, or tell everyone you told them so.

Time will tell. But i'm convinced gold is going to $1300, and the currency trade is going to take a hit. Let's hope other major economies have enough liquidity to give the recent recovery some backbone.

Good luck to all ....

LINKS:
XAO
http://hfgapps.hubb.com/asxtools/Charts.aspx?asxCode=xao

$INDU (Dow Jones Ind Ave)
http://stockcharts.com/h-sc/ui?s=$INDU&p=D&yr=1&mn=0&dy=0&id=p15683952710

SPY (S&P 500 spdr)
http://stockcharts.com/h-sc/ui?s=SPY&p=D&yr=1&mn=0&dy=0&id=p06950969434

GOLD
http://stockcharts.com/h-sc/ui?s=$GOLD&p=D&yr=1&mn=0&dy=0&id=p06950969434