At the risk of revealing my inner Prechter (I am a deflationist at heart because I believe the odds are better than even that the ultimate resolution of the era of Inflation onDemand will be deflationary), here is the monthly view of the US dollar, having negated the weekly H&S (not really visible on this monthly chart) by rising above the right shoulder.
An email from an NFTRH subscriber prompted me to pull up the monthly view and the recent rise has not only negated the H&S, it has brought the larger monthly basing pattern out of 2005 to a more bullish looking state, with monthly MACD green and a shape that looks pretty good.
Prechter says a coming deflation would result in a recommendation of owning cash and gold. Not even US T-bills, heretofore considered the safest repository on the planet. That is because the debts of the Federal government would be so unmanageable as to call into question its ability to make good on its obligations.
I will question how long the stock market can benefit as the world’s reserve currency helps suck funds into US assets. But US stocks for the short-term are more positively than negatively correlated to USD as the dollar sucks capital into our markets.
The Fed is trying to devalue the USD but the reserve currency is acting as a haven. The whole developed world is supposedly at [currency] war. With all those parts in motion who on earth can make total sense out of what is going on?
Maybe we do not have to make sense of every aspect of everything that is in motion now. But we should watch the USD, the kingpin lot a very sorry lot. NFTRH is going to provide space for Uncle Buck in the analysis going forward. It failed to break down and has defied the ‘death of the dollar’ cult for so long now, there must be meaning in here.