Bad News For The Dollar

Some of you may feel that my call for caution yesterday backfired but nothing could be further from the truth. Let me try to drill this into your little rodent brains one more time as it is worth repeating: There is tape that offers us a reasonable risk to benefit ratio and then there’s the exact opposite – house of cards tape that runs on fumes and may bury your ass at any moment’s notice. Now if you’re a gambling man and held massively long into today – yes, you may feel like you made a great call and you’re the king of the universe. But unfortunately you would be sadly mistaken – getting away with risky trades only breeds additional risky behavior and given a sufficient sample size this will invariably lead to you getting cleaned out. Just a matter of time…

I have nothing else to say about equities that I didn’t already address yesterday. We’re a few handles higher and that very scenario was already mentioned, so I sincerely hope you didn’t load up on shorts yesterday. Let me repeat this – picking tops (or bottoms) is for losers and this is twice as applicable in a market fueled by massive quantitive easing. Enough said – we’ve picked this bone many times.

Bottom Line: I cannot be long equities here and until I see a decent short entry I also cannot be short. Let’s remain patient and remember that it’s always better wishing to be in a trade than wishing to be out of one.

Besides, what really has got my panties in a bunch today is the EUR/USD which was massively propelled higher on continued expectations of a non-taper by the FOMC. Technically speaking we are now entering into very dangerous territory. Although it’s certainly possible that we’ll see a quick pull back here the damage has been done and for the old greenback the doors of hell have officially swung open.

On the weekly we are far above the upper 100-hour BB which levels the way for continuation higher. You may also recall monthly support below at the 25-m/100-m SMA duo. Our bullish price objective on the P&F is near 1.45 and I now have little doubt that it’ll make its way up there. So say hello to higher energy, food, and commodity prices – it’ll be a long winter for the Dollar it seems.

The gold bugs are rejoicing as the shiny metal managed to punch above its 100-day SMA. However, not so fast – there’s a weekly NLBL at 1353.8 and I think this makes for a great inflection point. A push higher most likely means confirmation for a continuation higher.

But there’s another precious symbol that I think is even a better catch right now – please step into my lair:

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Cheers,