Still Soaring....

OK so this sucker is not going to lie down easily.... EURUSD is powering ahead and USDZAR broke below the mini uptrend level although both as yet have not broken above and below (respectively) their high and lows - WOW now even I am confused. EURUSD is a whisker away as I type this: 1.4817 where the previous high recorded was 1.4845 on Sep 23. So all is not lost until these highs (and lows) have been broken, although my confidence levels have diminished somewhat.

I'm still heavily short the stock market although have been stopped out of my EURUSD short. I'm going to sit on the sidelines a bit and watch EURUSD, if this puppy melts up I would be truly surprised as the Sentiment index - DSI is sitting at a measly 3%  Dollar Bulls which leaves no-one to sell Dollars - anyone still got some?

Things currently do not add up, markets are rallying for the wrong reasons as fear of supposed inflation swells although where is the inflation ???? CPIX is dropping, house prices are dropping , food inflation is dropping, we are in deflation people!

As the old cliched saying goes - "markets can stay irrational longer than you can stay solvent" - I might be well be tested on this theory....

All I can say is be careful out there - Blogs that I have been reading that have been uber Bearish are starting to lose there Bears one by one. Bloggers that were unable to type |Bull" are doubting their Bearishness - these are all signs that the Bear is only just around the corner. We could be in a seasonal inversion this year: where we rally in October a traditionally bearish month and drop the rest of the year a seasonally bullish period - just to REALLY throw Traders off the scent.

Gold may be blowing off to the upside and can have incredibly volatile swings - look back historically to the 80's when gold spiked up over $800 - are we heading for something similar I don't know. I truly expect gold to follow the deflationary route which is down with all other asset classes - at this stage it is defying gravity and powering up. Gold is a great hedge against currency devaluation which all central banks seem hell bent on or a hedge against uncertainty - which lets face it, there is plenty of...

In the greater scheme of things I'm expecting deflation to really come home to roost over the next couple of years which should act as a drag on gold, commodities and all assets in general including equities, houses, food etc. Only much later inflation will start taking hold and probably extend in hyper fashion as countries could default on their debt, wars break out and significant restructuring of economies will happen. This is the period in which I expect gold to flourish. So don't preempt me buddy - I'm routing for you, not just yet!

By the by - anyone have more info on SHP (Shoprite) re Steinhoff possible merger - I'm short the sucker and this chart just tells me watch out below....