As you’ll recall, the BAM US Dollar Index model has been warning us of a coming crash leg back to/through the 2008 lows.  Since that warning went out, we did get back into our long YEN position via the FXY (ETF) in the BAM Model Portfolio, (and that has been working for us) but I haven’t focused much on dollar weakness since then.

Now, however, we need to look around for anything and everything (thus the H1N1 focus lately) that could disrupt the big bounce in stocks and send them back through the March lows.

What is also particularly interesting to me is that the USD model is now matching up nicely with the stock model (which was not the case until stocks inverted recently)–both calling for a sustained decline with lower lows into the first quarter of 2010. (I’m sticking with that SPX 529 target.)

Sure seems like a lot of moving parts to follow–much less move, or “manage”–and I think the model might be telling us that, despite their best efforts, the FED and gov. are making matters worse and that, gradually, they’ll be losing more and more control as we trade forward.

Today’s spike looks to be stalling into this BAM 897 magnet and the market is clearly bearish into 5-6 in my work.

Full report coming soon