In the chart below, I highlighted that a “Head & Shoulders” pattern had formed in the U.S. Dollar and that a break of its NECKLINE was taking place. Shared in the post (see post) that Commodities and Stocks should benefit from the break of the neckline.
Update below…
Even though many fundamental reports appear to reflect softness, which might have kept investors totally on the sidelines or shorting the stock market during one of the best September rallies in decades, the action of the Dollar continues to suggest that International and Commodity holdings are the areas to overweight portfolio holdings.
With the Dollar ETF (UUP) FAST APPROACHING KEY SUPPORT, make sure trailing stops are in place to protect gains in the Commodity and International positions.
CK,
Since you have the 4% already, that is fine. Want a little more room go to 5%.
I do feel the dollar has and will impact gold and gold shares, yet since this is a 2 plus year break above resistance, I would be a buyer, with a stop.
Look what has happened to Gold and Silver once they broke resistance! The dollar does impact other assets, yet earlier this year Gold and the Dollar rose together. I have no idea why. This is a prime example why I like to look at each asset on its own.
When I bought ewo and eem I immediately placed 4% trailing stop losses on them. Should these be adjusted?
If commodity and the international etfs are dependent on the dollar does it make sense to hold off on new positions (ex. buying gdx on recent breakout) until the dollar situation is clarified?
This anti-dollar play is interesting to watch, and seems to rest on sound logic with QE2 all but inevitable now. The big vulnerability in this “risk on” trade is oil. There the feedback to the fundamental economy from the speculative trade becomes ever greater. Another 5-8% and it will be near its April peak.
That might happen just before QE2 is announced next month. Buy the rumor, sell the news?
We live in interesting times…