The fight continues as the US (the fed specifically) continues the futile attempt to recover from the spending hangover of the last decade plus.

It is a spirited battle and despite the brave face put on by the patient (the economy) through the sucker rally of the stock market; serious radical surgery is required which can not be avoided without continuing to jeopardize any chance of recovery ... U.S. citizens are starting to understand how they have been sold out by the pupeteers controlling the Irish President O'Bushbama. (no slight to the Irish intended ...go PADDY)

The resistance to health care reform is a sign citizens have woken up from the grog and that those like Ron Paul and Alan Grayson are leading the brigade within their parties to bring this to the fore.

As I write, the US$ index has for the second time in two weeks breached its prior 100 day low of June 2 (78.531) when its 50 day moving avg was in excess of 81.5. Currently sitting at 78.27 and with a 50 day MA of 79.38 the strong dollar policy is a myth. Of interest is its 100 day low of 77.576 (Aug. 3) had a 50 day moving avg of 79.54. The last time the last weekly close (76.587) lower was on September 25, 2008 Since September 2007, the lowest US$ index was 71.44 on March 27, 2008.

Having for a second time in two weeks breached its 100 day low it certainly appears the next dollar test will be the March 27, 2008 low.

The US plunge protection team must be running out of money as they fight one fire after the next ... they will have a challenge in defending the dollar. The announcement that quantative easing is still scheduled to end in October did little to inspire any confidence ... so we wait.

Should we see support resolve to proceed with the decision to eliminate QE we likely see a significant jolt to interest rates. The spin doctors have been hard at work attempting to conivince us the worst is over this sets up for at leat reducing the QE but as interest rates rise and more mortgages are underwater and commercial real estate busts their is a limit to how much interest rates can rise. Continuing the QE will likely see a breach of the March 27 US$ index low which could make things very very interesting and a very good reason to hold gold and silver.

October is a crucial month ... expect a lot of dancing by Bernanke ... expect a lot of scrutiny by Paul and Grayson.

I have begun trimming equity positions be it premature or not for either way it is highly likely that the market will retest its March lows. The market rally will end with little more than a whimper as the bear roars back.

The Canadian market remains as absurdly high as the US market and corporate profits will be extremely negatively affected as will government funding ... both impacted by the extreme hit they will face as unfunded pension obligations on the last of defined benefit plans demand even more of whatever profits can be eked out as consumers continue to retrench.

The next leg of the great devestation is nearby ... watch the signs and if much of what I posted does indeed come to pass follow closely the following peoples sites: Jim Sinclair, Ted Butler, Peter Grandich, John Embry.

There is absolutely no reason to DESPAIR ...as long as you PREPARE.

the prophet