SPY--Today requires a reappraisal of the previous bullish and the neutral posts on the snp. The spy bottomed on very high volume at 74.34 and then rallied on diminishing volume to 90. It then fell on low volume for a secondary test 12/1 and then rallied on diminishing volume to 12/8. We had another secondary test on 12/12 and today 12/16 rallied on the least volume in December so far. The slope of the volume the entire month so far has been down. This is clearly a warning that demand is petering out and the high of 12/8 must be watched carefully for an upthrust. A fall from here will be very sharp indeed.
The dollar and gold did as predicted and have entered the marking up phase of their moves. We must watch if at zero per cent interest rates foreign funding of our debt dries up, given a sharply falling dollar. Very telling in this regard is the rise of the yen.
As already described, there is much evidence in the charts that hedge fund liquidation is currently on hold, but the yen continues to rise sharply. Perhaps Japanese investors realize they can get 0% at home as well as here, but without the currency risk. If so we are about to enter a currency crisis as well as a banking crisis and a new stage.
