Gains are holding very well considering the HUUGE rally yesterday dow is off a mere 50 points..just 1/9 of yesterdays gains lost this rally isn't going away. I added some more to my positions divided among coal, visa, and potash today after taking a beating for the past three months. Further proof that this is a weak dollar rally is the fact that oil and the markets are rebounding together: The bill WILL be passed with tax payer protection, which will equate to another 700 point gain in the dow. What sucks though is that everything that was holding well such as MOS POT GOOG ect got decimated in the past two months while the broad indexes were only down a little.
oil is a complete non issue at the moment, because as you have noticed, it is simply following the equity markets, and will continue to do so as long as they remain really volatile.
I agree that UK has some serious trouble facing it. Both structural longer term and the crumbling housing market etc. Germany - which is the core strength of Europe along with the new member states - are however quite healthy. A steep depreciation of the USD is not in the interest of anyone except mad people, but a long term erosion of the USD worth will happen - as the crisis diminishes and the real worth of the US economy emerges. Right now it looks like every US citizen will be owing USD 8300 next year with the projected fiscal deficit. Risk aversion and growth problems will imprint that on the USD - no doubt.
Only problem with that scenario is that US is likely to see deflationary pressure, i.e. dollar appreciation, rather than inflation for some time. From what I can tell it is the only explanation that makes sense in explaining the current dollar strength.
another reason for the current USD strength may be that everybody buys USD because they are hard to borrow. they can then use them for funding or swap them at advantageous spread. I doubt US faces deflation - stagflation is much more likely scenario. once this crisis is over we can be for quite a ride...
DOW makes a new closing low for 2008 ... 500 points down since you posted this. Also POT was absolutely crushed the very next day after you added to your position. What do we do now oh great one?