As you're no doubt well aware, the US stock markets have been on an absolute tear since March 2009. Indeed, October stands as the first month stocks closed at a loss this year, which means the market had seven straight winning months in a row. As Brian noted in Tuesday's essay, that HAS to be some kind of record.

The mainstream media, looking at the above chart (and the Fed's proclamation that the recession is over) believe we have entered a new bull market. I will admit, at first glance the market DOES look as though it's managed to beat every significant down turn and explode higher.

The only problem is that the above chart is priced in US Dollars: a currency that has lost 15% of its value this year. Remember, investing is all about relative value: assets do NOT rise in value in a universal sense. Instead they rise relative to other assets.

Here's a chart of the S&P 500 priced in euros:

As you see, US stocks, when priced in euros, have largely been trading sideways for the last three months. I should also note that they had a significant down-turn from May-July (a period that doesn't look NEARLY as negative when the S&P 500 is priced in US Dollars).

However, the most critical element of the above chart is the fact that the market (priced in euros) is bumping up against MAJOR support. As you can see, the market has bounced at this level no less than three times before. The bounces from this level have gotten larger, but stocks have never managed to avoid returning to this line. IF STOCKS BREAK BELOW THIS LEVEL, this forecasts a significant collapse (the gap down goes to 6.3, a full 10% lower than today's levels).

Ok, that's the case for the market priced in euros… but what about Japanese yen?

Practically the EXACT same chart:

Again we see the market (priced in yen) trading sideways since August and testing a line of major support.