Following The Bouncing Buck Continues But Causes Confusion – Stocks began Friday’s session

deep in the hole. Pundits noted another move to tighten by China. Of nearly equal importance was the
noticeable lack of detail on the presumed Greek “rescue package”. Traders began to wonder if there
really was a plan.
Those two developments gave a boost to the dollar. That, in turn, sent gold and oil sharply lower,
matching the opening stock selloff.
Around 10:00, the greenback rally paused. Less threatened, stocks, gold and oil responded by churning
sideways. As noon approached, the dollar index came off the highs and, in yet one more Pavlovian
reaction, stocks, oil and gold cut their losses in response.
Then, around 1:00, the Dollar Index (DXY) began to move up toward the morning highs. As if a bell
had rung – stocks, oil, and gold headed back down. Shortly after 2:00, the process was reversed again.
In the final 45 minutes, they staged a minor reversal of the previous reversal.
The dominance of the dollar was so evident that I was stunned from time to time to see brokers getting
calls from trading desks inquiring “what turned the market?”
Talk about not seeing the forest for the trees.
The Dow closed two-thirds off the lows. That allowed the first up week in the last five. Not quite a
resounding victory for the bulls, but a welcome respite at least.
Cocktail Napkin Charting – In Friday’s Comments, we wrote that the napkins suggested support in
the S&P was “way down around 1058/1063”. The sharp opening selloff took the S&P to an intra-day
low of 1062.97 before they circled the wagons. For today, we’ll stick with the 1058/1063 support.
Resistance looks like 1083/1088 and then 1093/1097.
China Watch – Over the weekend, there was some speculation that China is so concerned about a
lending bubble and potential inflation that they might allow (cause) their currency to appreciate. If so,
authorities must be really concerned.
On another note, Andy Lees passed along a warning from China’s Agriculture University. They claim
the over-use of nitrogen fertilizers has so poisoned the soil in South China that nothing will grow in it.
The year of food shortages?
Greece And The Euro – The Euro is firming this morning helping gold, oil and stock futures. The
European ministers are meeting amid a growing sense that failure is not an option. Additionally, polls
show that a majority of the Greek populace believe austerity measures are necessary and, likely,
overdue. That offers some hope of reform without street backlash.
Sunspots Before My Eyes – Sunspot activity perked up markedly last week. In fact, the numbers
returned to almost normal levels. The sunspot numbers for February 4th through the 10th were: 11, 22,
30, 51, 71, 63 and 55. We haven’t seen a number as large as 71 since spring of 2006. To keep things in
perspective, lets again review the average daily sunspot numbers in prior years. For the period from
1999 through 2009, the average daily sunspot numbers were 136.3; 173; 170.3; 176.6; 109.2; 68.6;
48.9; 26.1; 12.8; 4.7 and 5. Let’s not put away that sweater just yet.
Consensus – It’s still all about the dollar (DXY). The above noted hopes for some resolution to the
Greek crisis have gold, oil and stock futures all doing better. In 17 of the last 20 weeks, we’ve begun
with a rally. Follow the bouncing buck. Stay very, very nimble.
Trivia Corner
Answer - The only letter not used in spelling the names of all 50 states is "Q".
Today’s Question – Two term presidencies are not as common as you think. We’ve only had three back
to back two termers once in our history. Who were they?
and the obligatory history parable:
On this day (-1) in 1922, a 28 year old kid named Sam Hammett resigned from the Pinkerton Detective
Agency. The Pinkerton's were the most famous detective agency in the world. Begun over 60 years
earlier, Alan Pinkerton's firm was the model for the U.S. Secret Service. And, when Pinkerton took his
tactics private, he chose as his logo an open and possibly all-seeing eye. Thus the Public adopted the
image of a nonpolice detective as a "private eye."
Sam Hammett resigned from what he thought had become a bureaucratic form of investigation. He
liked free style - lone wolf.
So he left the firm, dropped his first name and began to write about the private eye he always dreamed
he'd be. So Sam Hammett became the writer Dashiel Hammett and invented Sam Spade (The Maltese
Falcon) as well as Nick Charles (The Thin Man) and set the tone of hard boiled, hard drinking
shamuses that would captivate Americans for half a century.
To celebrate, tell Vilma to park the gum, and tell the skirt on the phone that a partner is a partner not a
prom date. And if a messenger arrives with a newspaper-wrapped dingus - send it, along with most of
whatever else you have, to the I.R.S.
Traders could have used a detective to tell them what was going on yesterday last week. The markets
puzzled about what was the solution to the Greek question and what was going on in China. That
puzzling led to some volatile trading.

Art Cashin