The Dow does not need to break last year’s low. That was accomplished in the NASDAQ and S&P500. Nothing has changed there. The entire interest rate issue has far too many people brainwashed. No doubt, they would initially sell. However, the market will rise with higher interest rates as it has always done historically. Therefore, as shorts build, we can easily create a bear trap and that is the fuel to rally again. This is the churning we are in until it appears at least after September.

This time, we have a far more serious problem with where to put money – big money. Stocks are the modern-day version of what what gold use to be decades again when you could jump on a plane with a suitcase full and sell it wherever you landed. Today, metal detectors prevent that from taking place. Stocks are being used to move money but they must be the high-end shares that are traded globally (see article posted on Egypt).

There is ABSOLUTELY NO INDICATION yet that we are in a bearish trend poised to break last year’s low in the Dow. Another retest of support – YES.  Breaking last year’s low would ONLY be indicated with a monthly closing beneath 16000 and prior to August. That said, we have a more important number for month-end at 17579 followed by 17210. A May closing below 17210 would signal a possible test of the 16000 level in the months ahead.

Nevertheless, it is the first Minor Weekly Bearish Reversal in the Dow lies at 17434 which we have flirted with on Thursday. We need a closing below this today to suggest a correction is unfolding. However, make no mistake about it, the next critical area is 17120, which happens to be a Daily and Weekly Bearish Reversal. That is the level to watch for a serious short-term break.

Keep in mind that people continue to think this market is “rich” in price and the are concerned about earnings. Those ideas are so out of touch with reality. The PE Ratio reach 50:1 in 2000 during the DOT.COM Bubble, but it exceeded 120:1 during the 2007-2009 meltdown because blue chips are the place to secure money. The market is by no means “rich” from a historical perspective.

There have been a some unusual capital flow developments involving Egypt illustrating that there is a shortage of dollars building which has been caused by the decline in oil prices. This decline in oil has resulted in a decline in subsidies for Egypt from other Arab nations. What has been taking place is interesting. Shares of Commercial International Bank Egypt on the Cairo market have been bought using Egyptian pounds and then dumped in London sold for dollars taking a loss between 20% and 30%. There is such a shortage of dollars building, there are developing net capital movement through proxy instruments.

These trades have been creating regulatory problems. Typically, regulatory limits dictate how much of the company’s shares can be be traded offshore in the form of global depository receipts. This flow of shares is impacting regulations all because of  a shortage of dollars.