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Deflation could do it. Although the revision of the numbers from one (August) employment report ruled out any possibility of a recession, much less a deflationary recession, right? Right?

How about debt deflation? It’s coming, only question is whether the Fed has the power to stop it. In some circumstances, they don’t, just as Japan hasn’t for… what, 20 or so years. A deflationary contraction could conceivably outrun the Fed’s inflationary power, if it were severe enough.

Or maybe not. Hell, I grew up hunting rabbits and driving tractors, for Chrissakes. I’m still pissed that Case bought IH.

Here’s the chart:

(click for larger image)

That’s a very Wolfe Wave -looking pattern to me. An ascending wedge for over 18 months, now a spike out of the wedge, a near-term bottom which touched the top trendline, and a retrace.

A break below $1.40/Euro would look like the start of a thrust, no? Could we see the low 1.30s in short order?

Let me put it this way: Think of every single thing you’ve heard or read about the dollar, gold, oil, etc recently. What percentage of people and articles are forecasting

• A stronger dollar?

• Falling gold prices?

• Falling oil prices?

• Falling stock prices?

Ten percent? Five percent? One percent? How many guests on CNBC are saying, “Oh yeah, Maria, $60 oil and $500 gold on the horizon”? Limit as x goes to zero?

Now, with virtually everyone on earth on the same side of the boat, what does your trading experience tell you would bring Mr. Market the greatest gleeful pleasure, evil sadist that he is?

Think about it.