…The Japanese market has a date with destiny. The chart suggests that the trend will continue until the previous high is surpassed. That’s not too far away, but the gains could be rewarding for those who “know when to hold ‘em and when to fold ‘em.” The press is suggesting a weaker yen is the catalyst.

The Shanghai Composite index made a mild comeback last night from an earlier decline. But it hasn’t exceeded its former high, which may be problematic. This could set the near-term course towards newer lows. There are recent articles about the eerie similarity to the Nasdaq of the late 1990’s and the Shanghai index today.

Stocks rallied today on news of tamer-than-thought (?) consumer prices, according to MarketWatch. But is this the beginning of a much larger surge, or a valiant attempt to repair the damage from last week’s rout? Bonds have taken a real hit this week and higher interest rates are putting a shadow over all of the leveraged buyouts that are keeping the market rising. So the question is, “One more fling or are the markets tapped out?” We’ll know very soon.

…which was below 105. The pundits say, “Yields will continue to rise.” The charts agree. A seasonal cycle bottom is not due until the end of July, at the soonest. This week’s bounce marks a shorter-term cycle low. I’ll be watching it to see what develops, but so far, the bounce looks anemic. The capital flows into the U.S. are still high, but, unless interest rates stay high, large investors could turn to other countries whose rates are also rising competitively.

Not by the looks of those rising interest rates. The final housing numbers for 2006 are in, and they confirm what anyone who bought or sold a home last year has suspected: It was the worst housing slump in nearly two decades.

“With fingers and toes crossed, it appears that we have hit bottom in the existing-home market,” he (David Lereah) said. The trade group's official forecast calls for a 1.2 percent drop in sales of existing homes this year and a 1.5 percent increase in the median price. Does this report evoke new confidence in the housing market?

…and this time for keeps. Last week I suggested, “…if the dollar can rise above the 50-day moving average again, its near -term future may look a lot brighter.” I believe that this hurdle has been successfully handled. Comparison to other currencies puts the dollar in an even better light. For example, the yen just fell to a 4 ½ year low against the dollar this week.

A recent article measures gold’s rally today in “inches” as the dollar “wilted.” That’s about it as the price of gold has steadily declined. Today’s rally in stocks could have sparked a much stronger surge in gold, since the recent correlation between the two indexes are quite high. 

“'Given expectations for higher interest rates to stem inflation concerns, it seems gold and the other precious metals will remain under pressure' in the near term, said TheBullionDesk.com analyst James Moore.”

Last week I mentioned, “We are fast approaching the $2.15 target mentioned in last week’s newsletter.” Today’s headline reads, “Gas prices expected to rise at pump.” They may be right. The market rarely travels in a straight line for any length of time. The Energy Information Agency asks, “Will we see $4 a gallon prices widespread throughout the country, as some analysts are predicting, or will we see prices continue to fall and approach $2.50 per gallon? Or, somewhere in between?” For the time being, I suggest “between.”

Natural gas prices abated at near-normal temperatures and a reduced uncertainty about supplies eased concerns about prices. What may be keeping prices steady and not falling are concerns about the hurricane season, which could force the evacuation of rigs in the Gulf of Mexico and cut off the normal flow of natural gas through the Gulf ports.