I have received numerous emails recently, asking questions along this line….We have done very well of late, what could change the recent upward price action/trend? (Good, Bad & the Ugly soundtrack)
A good friend often reminds me a “blizzard starts with a single snowflake that fits on the end of your finger!” Right now positive snowflakes are all over the place…trends are moving higher and breakouts are taking place in key stock index’s!
The key to whether the quality upside move of late will continue, will most likely be determined by what the U.S. Dollar does at line (1).
Will the rising support line hold or not? This support line DOES NOT justify selling International positions (EEM, EWZ, TUR, GXG, THD) or Commodity positions (SLV, GDX, GDXJ, SLV,OIH), yet it should raise awareness that stops should be in place to protect quality gains in every holding you have!!!
What currency could replace the U.S. Dollar? A tremendous amount of debt out there has to be paid off in dollars. There is not enough cash flow to service outstanding debt. This creates a demand for dollars. Despite all the stimulus and quantitative easing thus far there has not been any inflation to speak of. Will QE2 be any different? We will find out. But in any case, using Mr. Kimble’s methods, you don’t need to know or guess to be a successful trader/investor. So why waste your energy trying to figure it out and reading a bunch of low-energy hype along the way?
Great comment about a flag/pennant pattern.
Just for a minute, look at it this way… the dollar is approaching support, at a time when the sentiment numbers are 3%bulls.
When is the last time someone mentioned concern of the PIIG countries? When the PIIG’s were front page news (Greece is going to bring down the world) the Euro was in the tank, going to break apart and everyone loved the Dollar, with 98% Dollar bulls…when was this?
At the top of the flag/pennant pattern. How things have changed since June the 7th!
From what I have learned of charting over the years I am always wary of the pennant or flag formation of a chart. When they break they can break either to the upside or the downside as did the chart back in 02 at the sharp end of the pennant. Given that the US is still doing what it is doing badly and diluting the value of its own currency any rally will be either sharp and shortlived or a little stretched out but eventually doomed to fall back from the upper downward trend line. We are getting towards the sharp end of the pennant again folks. Which way will it break.
And if Consumer Price Index, Retail Sales, and Consumer Sentiment all fall into that gas station crapper, the market will take off like a rocket to the moon. Illogical, isn’t it? But then patterns have their causes in things like Bernanke “hinting” QE2 is just around the corner to goose the market and make everyone’s account swell so we all feel rich again and go out and spend money.
Frank…ouch that one hurts!!!
Don’t worry, everyone, Bernanke called me earlier and said that he’s going to keep printing USDs until he can sell his Apple shares at $400 a piece.
haha more like gas station toilet paper
Dollar is within 1% of this rising support line this morning.
Support is support until broken.
Support breaks here and the Dollar become Charmin type paper???
As mentioned in an earlier comment, which was deleted, the USD has further to fall. KABOOM.
YTD 80% of option expiration weeks have ended positive by .50 bps for people that bought on a Monday and sold on a Friday. Obviously, the bulk of that probably came yesterday for us, but you can’t sell this market yet.
In the end, what are our options? Sell to holding a losing USDs, buy bonds with no yields attached, or gold (which may see a correction some time soon).
Looking at the S&P500 index as a general indicator for the last month, Thursday has been a sell-off day. Maybe a good time to establish positions.
OCT ’07 ….. last time Canadian Dollar broke Parity.