Kill (Dollar) Bill
The race to the bottom is on. Everyone seems to be eager to face Uma Thurman’s katana to cut the value of their currency in little pieces.
Unfortunately for any remaining equity bears our beloved Federal Reserve continues to be winning – uhmmm losing – well, whatever side they’re on (most likely not on the people’s), they getting what they want. Which is a pre-midterm-election equity market melt-up. How high will she go? I’m not taking bets – especially after looking at the NYFR POMO calendar.
[amprotect=nonmember] Charts and commentary below for anyone donning a secret decoder ring. The rest of you guys will have to wait until tomorrow – sorry. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
[/amprotect] [amprotect=1,9,10, 5,2]
I think this very nicely confirms a lesson I conveyed about trading FX a week back: When it comes to commodities or currencies the trend ain’t done until it’s done. Despite a mere 5% of Dollar bulls as well as BOJ overnight interventions to kill its own currency ole’ bucky was again manhandled POMO style and now finds itself deep below its 61.8% fib line. The next major support I see is the 76.75 – 77 cluster.
Until the dollar starts to paint a bottoming pattern (not just one candle up) there is no telling how low it’ll drop. The trend is the trend until it’s over. And until a turn happens equities will most likely find floors or – just like today – paint new highs. Tough times to be a bear – be a rat instead 😉
Of course none of that matters much on a long term basis. We have come a long way and I would not want to be long here (equities). Yes, we may push quite a bit higher (call that the Rapid Express Elevator Soylent Green scenario) – I’m not discounting that. But the odds are not where you want to start chasing the tape in equities. If you’re short the Dollar – good for you – and you may want to start taking partial profits. Yes, we may push to 77 or even 75 if things get ugly. But with 5% (and probably by today 3% to 4%) Dollar bulls even trend traders should consider locking in profits.
Always remember: Bulls make money, bears make money (sometimes), pigs get slaughtered.
P.S.: Tomorrow is another day yes – but it’s another POMO day. Trade accordingly