Direction for 2010?
As I am reading the monthly currency charts, I am seeing one common theme: USD and CHF strength. Normally we see this when traders are in the midst of a “flight to safety.” This generally means bearish things for the equity markets. Take a look at the following Dow and S&P500 weekly charts. We are currently at the 50% retrace of the large meltdown. We are at a major spot now, and the trend will show itself soon.
If there ever was a place for a sharp correction, it’s here. It’s also not uncommon for a second leg down in bear markets, and this would set up perfectly on this chart.
I believe one of the most important days of the year is January 8th. The Non-Farm Payroll Report comes out that day, and after last month’s surprise to the upside, it needs to deliver good news. If is disappoints, it could be “Look out below” for the markets. If it surprises to the upside, it could be the catalyst to clear this 50% hurdle.
Chris
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