CLICK ON CHART TO ENLARGE
This morning the U.S. Dollar is working on breaking above a 10-year falling resistance line. Breakouts often bring about further buying pressure. At the same time the Dollar is working on breaking resistance, sellers in Crude Oil are stepping forward and causing a break of support, pushing Crude below $90.
The Power of the Pattern reflected back in February (when Crude was trading at $109) that bearish patterns were taking place and the chart below reflects that the last two key declines in Crude oil also saw the 500 index decline 19% on one occasion and 45% in another (see would a crude decline be good for the S&P 500)
CLICK ON CHART TO ENLARGE
Falling gas prices are nice on the pocket book, yet falling Crude Oil prices are often hard on the S&P 500 index! The top chart reflects a breakdown in support in Crude and the Dollar is attempting a breakout above resistance.
What does this all smell like? (see other signs of Deflation here)
When it comes to portfolio construction, capital preservation becomes important during times of “De-flation/falling prices!”
Luke…great question!
With fresh flag breakdowns in Copper and now Crude is taking place, a new leg in DE-flation should be starting!
Deflation should pick up speed on a Dollar breakout!
Chris
A good chunk of the day is over and the dollar still keeps powering higher. Is there a way to know how much deflation we’ll get if this doesn’t stop???