Of late the markets choppy action has been somewhat boring, kind of like a rocking chair…its keeps you busy, yet you get nowhere! Is the boring action about to end?
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The Dollar ran into a brick wall of resistance at (1) 6 weeks ago. Now the Dollar is making a second attempt to get above resistance and its 38% resistance level at zone (2).
So far a breakout HAS NOT taken place and RESISTANCE IS BACK AT HAND… yet if the Dollar can muster up enough strength to close a couple of percent above the 79 level, the lack of trend of late will come to an end!
Portfolio construction/positions will be extremely important should the Dollar breakout and will be key to the Shanghai and Commodities (see post here)
Tom…Thanks for the kind words and viewership of this blog and dshort.com. How far above to confirm a breakout? Not a written rule, more of a risk tolerance question. I would say a 2-3% close above the 750 level would get close to confirming a break of this pattern is at hand. For aggressive investors, shorting as close to 750 as possible reduces the amount of loss on a breakout. After the post, the Russell got witin 1% of the 750 level, providing a good entry point.
Chris
Chris – AMAZING work you did on Russ 750:
http://advisorperspectives.com/dshort/guest/Chris-Kimble-111115-Russell-Repetition.php
Forgiving my ignorance – Over how long a period / or for how long must we bounce up against 750 before you get seriously concerned?
Thanks For All!
– Tom
PS I know we are looking for sustained Russ below 650/600 (?) to confirm serious trouble
Disclosure: Net Short
(And never got skilled using stop losses!)
This is purely hypothetical, but what if the dollar up / risk assets down paradigm of the past decade has come to an end?
Surely we’d have to see it in the technicals to confirm as much but there was a time during the 90s when a strong dollar led to higher asset prices (at least equities).
One week a trend does not make, but I find it highly interesting that as of late, risk assets have been largely immune to the dollar’s strength…
Just something for us all to think about I assume relative to our assumptions of what “should” happen.