On June 14th I produced the chart below (see this post). The Patterns suggested to….SHORT THE DOLLAR (due to a rising wedge and 90% Bulls) and LONG THE EURO (due to falling wedge and only 5% Bulls). The chart below and post reflected that extremes/turning points were at hand. If my read on the patterns was correct, stocks and commodities were about to rally.
So what happens when the Dollar shrinks? Almost Everything goes up…. Stocks, Commodities, Emerging Markets and Bonds too! In the past four months, the U.S. Dollar ETF (UUP) has lost over 12% of its value. (see below). The “Power of the Pattern” worked again!
Four months ago it paid to SHORT THE DOLLAR and LONG ALMOST EVERYTHING ELSE…Now what???
If you get the currencies right, almost everything else falls into place! This is why I continue to do currencies posts.
The Dollar is on support, the spread is rather large and only 5% of investors are bullish (Trade-Futures.com) the dollar right now. Make sure stops are tight on the long holdings that are in place right now!!!