Here is what I said then about the Yen, which I still believe to be the case today.  I have also included a chart below updated through yesterday:

Next, onto the Japanese Yen.  Up until 2-3 years ago, it was widely believed and (commented upon) that a rising Yen was a sign of danger.   This belief seems to have diminished; however, the strength of the Yen has not.  Is the rising Yen still a signal of danger in the markets?  I believe that it is.

Here is the daily chart since 2005 as depicted on a LOG scale.  The 50-day M.A. is shown in blue.  As one can see, there has been a continued string of strong uptrends, and the Yen pricing action is increasingly “parabolic” in nature:

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1120.76 as this post is written

I would like to start by featuring a couple of long-term charts of the U.S. Dollar.

U.S. Dollar weakness is a foremost concern of mine.  As such, I have extensively written about it.  I am very concerned that the actions being taken to “improve” our economic situation will dramatically weaken the Dollar.  Should the Dollar substantially decline from here, as I expect, the negative consequences will far outweigh any benefits.  The negative impact of a substantial Dollar decline can’t be overstated, in my opinion.

First, a look at the monthly U.S. Dollar from 1983.  This clearly shows a long-term weakness, with the blue line showing technical support (until 2007) that has now turned into (technical) resistance:

charts courtesy of StockCharts.com (click on images to enlarge charts):

Next, another chart, this one focused on the daily U.S. Dollar since 2000 on a LOG scale.  The red line represents both a trendline as well as a relatively good visual “best-fit” line.  The gray dotted line is the 200-day M.A. (moving average).  As seen on this chart, the U.S. Dollar looks vulnerable to continuing its downward trend that has been interrupted since early 2008:

Lastly, a chart of the Dollar on a weekly LOG scale.  There are some clearly marked  channels here, with a large, prominent triangle featured.  Triangles are thought of as “continuation” patterns.  In this case, it would be a continuation of the Dollar downtrend since 2002:

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Next, onto the Japanese Yen.  Up until 2-3 years ago, it was widely believed and (commented upon) that a rising Yen was a sign of danger.   This belief seems to have diminished; however, the strength of the Yen has not.  Is the rising Yen still a signal of danger in the markets?  I believe that it is.

Here is the daily chart since 2005 as depicted on a LOG scale.  The 50-day M.A. is shown in blue.  As one can see, there has been a continued string of strong uptrends, and the Yen pricing action is increasingly “parabolic” in nature:

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Lastly, a Gold chart.  I have written many posts about Gold.  Of course, the most common question that arises with regard to Gold is whether it is in a bubble, which I have discussed previously.  Certainly, the price action since 2001 would support such a claim.  However, there is much more that should be considered before one can conclude that Gold is in a bubble.

Here is a monthly chart since 1980, as depicted on a LOG scale.  It is interestingly to compare how Gold’s rise has correlated with U.S. “reflationary” efforts over the last 10 years:

Now onto Part III, a look at the bond market and interest rates…

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A Special Note concerning our economic situation is found here

SPX at 1183.08 as this post is written

“Additionally, is it not odd, on an “all things considered” basis, that the Japanese Yen is rising at what appears to be an increasing rate?  This rise commenced in mid-2007, as seen below:”

Here is the 5-year daily chart of the Japanese Yen:

Chart Courtesy of StockCharts.com

Here is the 1-year daily chart.  As one can see, there may be a Cup and Handle chart pattern forming from early 2009:

 Chart Courtesy of Stockcharts.com

Now onto Part III…

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SPX at 1040.14 as this post is written

I would like to address the daily chart.  It seems odd that in an environment in which

1. inflation is (purportedly) a growing concern
2. the economy is supposedly recovering faster than anticipated
3. Treasury debt auctions have been materially increasing in size

that since roughly early June, the Ten-Year Treasury yield has been decreasing:

Ten-Year Treasury Yield Daily 1-Year Chart

Chart Courtesy of StockCharts.com

Ten-Year Treasury Yield Monthly Chart

Chart Courtesy of StockCharts.com

Additionally, is it not odd, on an “all things considered” basis, that the Japanese Yen is rising at what appears to be an increasing rate?  This rise commenced in mid-2007, as seen below:

Yen Daily

Chart Courtesy of StockCharts.com

Now on to Part III…

SPX at 1042.73 as this post is written