CLICK ON CHART TO ENLARGE
No tool is flawless/the holy grail…yet the Euro has been a good tool, per helping investors build portfolios, (know when to have a large exposure or a smaller exposure to stocks), over the past couple of years.
As one can see from the chart above, when the Euro was at the top of its trading channel and it broke support, it wasn’t suggesting the sky was going to fall, yet it has paid off to limit longer-term exposure to the S&P 500….is it going to be any different this time?
The market is down 6 weeks in a row and bullish sentiment has dropped off quite a bit, so a short-term rally is very possible.
From a longer-term perspecitve, do keep in mind that the Euro does remain at a level that very high long-term equity exposure to stocks hasn’t been very rewarding to investors.