GLOBAL STOCKS AND COMMODITIES SURGE ON G-20 DECISION TO KEEP MONEY CHEAP AND STIMULUS PROGRAMS IN PLACE -- DOLLAR PLUNGE SPURS FOREIGN CURRENCY BUYING

KEEPING MONEY CHEAP ... The weekend decision from G-20 nations to maintain current global stimulus programs pushed the U.S. dollar sharply lower and global stocks and commodities higher. Foreign currencies surged as well. Chart 1 shows the Euro gapping higher after bouncing off its 50-day average last week. With all foreign currencies rising, two of the strongest are the commodity-based Australian and Canadian Dollars. Those two currencies get a double boost from a falling U.S. Dollar and rising commodity prices.

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COMMODITY MARKETS REBOUND... As is normally the case when the U.S. Dollar drops (and foreign currencies rally), commodities rally as well. Chart 4 shows the DB Commodities ETF (DBC) bouncing in a short-term consolidation pattern near chart support at 24. Chart 5 shows the United States Oil Fund (USO) in a short-term trading range of its own above chart support near 39. Both short-term patterns hint at higher prices. Gold is hitting a new record high again (Chart 6) while gold shares (Chart 7) are close to achieving a new 52-week high (Chart 7). Many of the larger ones, like Barrick and Newmont Mining, have already done so.

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FOREIGN STOCKS SURGE... I recently showed foreign ETFs testing support at their October lows. Today's impressive price surge confirms the successful test of that support level. Chart 8 shows EAFE iShares (EFA) gapping more than 2% higher today. Chart 9 shows Emerging Market iShares (EEM) gapping more than 3% higher. Both are back well above their 50-day averages (blue lines). Of the big emerging markets, the strongest showing is in China. Chart 10 shows China iShares (FXI) hitting a new recovery high. U.S. stocks have joined the global rally.

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DOW HITS NEW HIGH ... Chart 11 shows theDow Industrials hitting a new recovery high. The S&P 500 and the Nasdaq Composite Indexes are well above their 50-day lines and moving toward their recent highs. All nine market sectors are rising today with the strongest gains in financials, materials, and industrials. Bear funds are dropping.

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BEAR FUNDS PLUNGE... A week ago the two bear funds shown below had climbed above their 50-day averages and were testing initial resistance at their early October peaks. Not only did they fail that test, but they're now heading back toward their October lows. Investors were buying the two inverse ETFs as insurance against a possible market correction. That need now appears to have passed. In other words, there's no longer any need to hold them.

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