TFT Critical Interim Update for October 14, 2010

Hello Traders

Below is the latest TFT Critical Interim Update for October 14, 2010. Many sectors of investing and trading are reaching some extremes. There are relationships within Metals, Currencies, Bonds and Stocks that are  indicating a willingness for speculators to take on excessive risks as the giant ball of global equity seeks higher returns in an attempt to outpace the losses brought on by deflationary forces of contraction.

Since quantitative easing is an experiment without a track record,  we can only guess at the outcome in the long run. Experiments are subject to criticism but then put the critics in the Fed Chair and see how well they do.

In terms of how speculators are reacting to this QE experiment is another matter since many seem to be betting on QE2 to keep the bullish fires burning. This is purely perception and guesswork when pricing the stock market, currencies, metals and Bonds to perfection. Tread carefully as the extremes become more extreme.

Below are charts of Gold and the US  Dollar. The rally in Gold may be hitting resistance and the break in the Dollar may be hitting support. If that becomes the case then I would expect that stocks may be close to hitting an upside wall. If Gold and the Dollar push past their resistance and support points, then the extremes that are in place now will simply become more extreme  as investors scramble to get vested. The playing field will get very crowded. Tread carefully as the extremes become more extreme.

Click on Chart to enlarge and Click again for larger version

Leonard Novy

www.Trainingfortraders.com

info@trainingfortraders.com

760 841 1522

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