Below was the quiz chart of last Thursday, 9/1 (see post here).
CLICK ON CHART TO ENLARGE
Thank you for the overwhelming huge global response. The majority of the responses were correct, per what the product was. I shared in the title of the quiz post “Portfolio Game Changer!” Many of you picked up on the clue and shared that phrase made the quiz easier. Thanks to all of you that sent in a response for the very first time. Honored to have you as a viewer and enjoyed your responses.
Many of you shared that you were reducing some risk exposure due to the Dollar chart or where adding to positions that were “attempting to score on defense.” For those of you that acted on the answer Thursday, Friday was a good day and this trade is working decently so far this morning too. For those of you that did not send in a response, below is the answer to the quiz….
CLICK ON CHART TO ENLARGE
I wanted to share the Dollar chart for two key reasons. (1)-it appears that the Dollar was creating a pattern that looked very much like the pattern back in 2008. (2)- If the Dollar would break falling resistance on this weekly chart (which it had not broken at the time of the chart, since the chart was done on Thursday), it would suggest that “risk assets” should be put under further downside pressure.
In 2008, once the Dollar did break above line (1), not only did stocks fall in price, the majority of assets fell in price, including commodities (oils, grains, s, meats, metals and global/emerging markets too!). There was no place to hide, the “Great Escape” was on. The dollar has made failed attempt after failed attempt in the past year to break above line (3). Odds increase a good deal that it the Dollar makes a solid breakout above line (3), the majority of assets will come under pressure again!!!
FYI-The above charts we made on Thursday, 9/1. This morning the Dollar is trading around 75.52, almost 1% higher than at the time of the post, which pushes the Dollar farther above resistance line (3).
While on the topic of currencies….Also keep an eye on the Franc’s action as it is breaking support this morning… it could impact the Dollar (see Franc price quote/chart here)
Take a look at charts for recent price movements for
Should the Euro collapse, and Germany return to the Mark, the only haven for currency will be gold and the $US. This fundamental is being reflected in the technicals of the chart. This is a very powerful turning point for the dollar and bonds. The low interest will be paid back in increasing buying power.
Andrew….from mid-2007 to mid-2008, the dollar and the 500 fell together, for almost a year! Once the Dollar broke resistance the rally in the Dollar took place and a waterfall in prices took place, in the majority of assets. So far we have no proof it will happen again, yet we do have to respect the possibility. The Dollar, on a weekly chart, broke resistance this past Friday, that was ONE business day ago. Time will tell.
What gets me is how so many didn’t see 2008 coming, which they should have!!! (Rising wedges had broken down all over the place, high yields were on sell signals and the ole “Shoe Box” indicator had suggested to go to cash). Now the same people that “DIDN’T SEE IT THEN” are saying it can’t happen again! I hope and pray 2008/Great Escape doesn’t happen again, yet as a few of us know,
“Hope isn’t a strategy!”
Sir John Templeton used to tell me, “when it comes to this business, it is better to leave the party too early, than to stick around too long.” The neat thing about the “Power of the Pattern” isn’t that it is the holy grail, because it is not. No matter how hard I work to read these patterns, I am wrong a third of the time. Yet when the pattern read is correct it can benefit investors in two ways…(1) Capital protection (2) Can help to enlarge portfolios when markets are soft.
Swiss Franc last week was up against a 30-year resistance line and had formed a bearish rising wedge. Two-thirds chance of the Franc falling, one third of a breakout. The pattern was suggesting to leave the party….earlier today the Franc was undergoing one of the LARGEST SINGLE DAY DECLINES IN 30 YEARS. As you and other viewers are well aware of, I don’t care to be right, per why things happen, I just want to assist people in enlarging portfolios, regardless of market direction.
Thanks for the great question and I will keep you and veiwers abreast per if the “Great Escape” odds look to be increasing or decreasing.
Can you explain the reason for the “great escape” in 2008 when dollar rallied but not in 2010? This shows that even though it appears clear the dollar is about to rally, a rally does not guarantee a decline in asset values. Also, I am confused at how this dollar move has not stopped GLD yet.