We closed today below major support in all major FX crosses --euroyen, eurodollar, Aussiedollar -- and this portends further weakness in the equity markets as the new deleveraging cycle accelerates. Capital flight is occurring in the European market which is driving FX markets which is in turn driving the dollar which in turn is driving US stocks (along with energy uncertainty from the BP spill) lower... In turn driving gold higher? Got that?
I expect more of the same the rest of this month and quite frankly the rest of this year. Short term setup on the s&p puts us at 1014. We will likely get there next week.
Be safe and get hedged If you are long -- it's about to get ugly.
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