Weekly Commentary for May 24, 2011

Silver gets whacked, Oil is getting a lot slicker. Gold climbs Monday, as stocks get sloppy. The euro stumbles, the dollar strengthens.

What is happening?

This dollar/euro thingy, as you will see, is important.

Look, the dollar is in a serious long-term downtrend. Don’t let anyone tell you otherwise. Long. Term. Down. Trend. And, as in any downtrend, you get bounces up, along the way.

But they are bounces, not a change in trend. And what we are witnessing right now is a short-term bounce up in the dollar, while the euro is giving back some ground gained recently.

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But I will say it again. US Dollar: Long. Term. Down. Trend.

If you have money in the market, you *want* a weak dollar. It is not un-patriotic. When the dollar is trending down, commodities and stocks do well.

Ben Bernanke wants a little inflation, which comes with a weak dollar. Don’t forget that.

When the dollar has a bounce up (as it is doing now), commodities (like oil) and stocks do NOT do well. And if the dollar is rising (like now), the euro falls.

Pretty interesting the euro falls apart JUST as Greece becomes a big topic again, eh?

So how long do these bounces last? Weeks? Yes. Months? No.

Funny thing is that all of these charts are simply doing the same thing: very few outright sell signals have been generated. And most charts are simply pulling back to the middle of their trading band.

But – I know – it’s frightening when the pull back happens in just a few days.