$USD at overlapping .25 major and .50 minor nodes...

As of yesterday, the $USD index had fallen below it's daily Bollinger Bands...We are in a window when the number of Dollar Bulls is extremely low. This is consistent with the fact that the dollar index is at a major .250 node (actual .25181) and a minor .500 node hits on the 10th of September. Also, there could be a maximum of pessimism as we approach the anniversary of 9/11...So there is a chance here, for a roughly synchronized pattern of equity declines, renewed dollar strength, and declines in precious metals.

This is a lot to think about, and of course, none of it may happen. There are things lined up though, that could make this scenario possible.

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Comment by Mark Lytle on September 9, 2009 at 3:05pm: Vincent,
Yes, it's true that things often really don't coincide in time, and it may not happen here either, as you've said. But one interesting thing about plotting things in log/exponential time is that sometimes chart patterns morph a bit. Just as a price plot, done logarithmically will sometimes show useful
trendlines that either don't appear, or don't work well with linear price scales, with logarithmic time plotting, a similar effect can be seen, which is why I am introducing this concept. See the possibilities for wedges when plotted this way, below. Not saying that this is the right interpretation, necessarily, but it is worth looking at...

Comment by Steven Vincent on September 9, 2009 at 1:57pm: I observe correlations on a regular basis and frequently they do not occur on a one-to-one or immediate basis. So I think a retrace in metals will precede a real rally in the dollar, though a short term bounce is probable. Today we are seeing an intraday turnaround in the dollar and metals. Commodities (barring crude) are acting soft. Absolutely no one is looking at the chart of CRB which is showing a bear market on all time frames. Total silence on this.

Comment by Mark Lytle on September 9, 2009 at 1:27pm: Yes, that's possible..it could take more time...I see a chance that equities could top soon though, and the nodes have a certain amount of 'slop' associated with them which would allow the dollar bottom a few weeks off....But the $gold:$silver ratio is fairly extreme right now, and it's been seen from time to time (not always!) that this corresponds to tops in precious metals. So I ask what happens if precious metals start to decline from here, reasonably short term? Does the dollar stay low, when it appears to be at least in a short term bottom? Would a major turning point in metals force a similar turning point in the dollar? There are just so many extremes happening right about now, that look like a resolution could be interrelated....

Comment by Steven Vincent on September 9, 2009 at 12:48pm: Bearish extremes such as we are seeing on the dollar do tend to result in a sharp snap back...unless the "collapse" really is in progress. On a simpler basis, the USD is at the bottom of its declining wedge formation. So a short term snap back seems likely. The wedge formation does have some time and distance to go before it reaches its apex, so the bottom may not be in yet.