U.S. Dollar Weakness Battles Negative Divergences

The yield on the 10-Year is under upward pressure as the market braces for another $81 billion in supply this week.

The US Treasury auctions $40 billion in 3-Year notes today, $25 billion in 10-Year notes tomorrow and $16 billion in 30-Year bonds on Thursday.

The daily chart for the yield on the 10-Year shows the 200-day simple moving average moving higher as resistance at 3.268. This month’s support is 3.581.

Comex Gold trades to a new all time high of $1,109.9 this morning as the Parabolic Phase begins.

My quarterly resistance at $1,135.1 is the next barrier given weekly closes above my semiannual and quarterly pivots at $1,101.9 and $1094.4.

Comex Copper begins the week above its 200-week simple moving average at 294.50. There remains a negative divergence in MOJO with a reading of 7.9 on a scale of zero to ten.

Weekly support is 290.1 with chart resistance at 309.44.

Nymex Crude Oil is also above its 200-week simple moving average at $75.51. Like copper, there’s a negative divergence in MOJO with a reading of 7.7. This week’s pivot is $79.72.

Economists and Fed officials say that there are no signs of inflation even with rising commodity prices. The Fed made the same mistake in 2003 when they cut the funds rate to 1% and kept it there for a year.

The Dollar Index traded to a new low for the move this morning stretching the dollar carry trade even more. Up trend support is 74.48 with the five-week modified moving average at 76.34.

The dollar is extremely oversold with a MOJO reading of 1.7.

Remember the yen carry trade of 2007? That ended badly and so will the dollar carry trade we have now.

The Dow Industrial Average appears set to open above my weekly pivot at 10,076 with resistance at 10,147, which would be a new high for the move.

The Ascending Wedge remains in tact with my annual pivots at 10,012 and 9,750, as does the multi-year bear market trend that goes back to October 2007.

The NASDAQ shows a negative divergence in MOJO with the October 21 and 23 highs at 2190. The five-week modified moving average is support at 2089 with this week’s pivot at 2140.

With the weekly charts for the Russell 2000 and Philadelphia Semiconductor Index (SOX) negative, the NASDAQ follows with a close this week below 2089.

It’s a Fed-induced MOJO world as bank failures accelerate, and Main Street USA struggles with an unemployment rate of 10.2% and rising.

The Recession continues with serious mortgage delinquencies rising rapidly. In my judgment time is on the side of this BEAR.

Disclosure: I Hold No Positions in the Stocks I Cover.