Here is my monthly look at key factors that affect stocks:

• US Dollar - Last month was more than an oddity in currency markets. I struggled with the conflicting relationships between the Yen Carry Trade unwinding and the extreme flight-to-quality from foreign assets to US Treasuries. I am maintaining the bullish stance I switched to on August 15th but all the moving parts of this puzzle suggests that it’s going to be another challenging month.
• Rates - While I have been correct about the downward direction on the 10-year Treasury since mid-July, that has been an easy call. The extremity of the credit crunch / flight-to-quality has knocked out the support levels I had counted on and we are now flirting with 4.5% which would break through the trendline of support from October 2002. I’d like to believe we are stabilizing here but given the threat of continuing credit problems and the possibility of a recession, I will maintain my downward bias for the 10-year.
• Commodities - During the August declines, investors were selling commodities to raise cash in their hunt for liquidity and deleveraging. That process ended a week ago and until we have another market scare, I expect the CRB Index to head higher - towards 320.
• Gold - For months I have been bullish on gold and while that has worked out overall, I have not expected the ups and downs - especially during the mid-July to mid-August period. Now that there is an odd sense of calm, Gold is finally pushing through the $690 resistance level I keep mentioning. So, I am sticking with my usual bullish tone on Gold until it definitively breaks down below $690.
• Oil - When Hurricane Dean formed, I switched to a bullish bias on oil. Amazingly, despite the fact that oil assets in the Gulf have not been harmed and the summer driving season has ended, oil prices are remaining firm. I am looking for another test of the record $78 levels and will hold onto my bullish oil bias.

These market forces are once again providing pressure on equities and while stocks have done well due to Fed intervention, they are not immune.