Sunday Evening DXY Update

One of the very interesting developments the last several weeks has been the correlation between the Dollar and the stock market. Unlike most of last year when the DXY and the stocks/commodities were "inversely" correlated, that relationship has been broken. Basically, the "Peter Schiff/Jesse's Cafe Americain" crowd that was predicting both doom and gloom for the U.S. Dollar and the stocks have been wrong on both markets. While the Dollar strength was predictable and anticipated using technical analysis and sentiment, the associated rally in stocks and commodities has certainly been a surprise to me. It will be interesting to see how the stock market now reacts to any Dollar weakness....

This weekend's thoughts were dedicated to the DXY which has achieved all of the price and duration targets we had been expecting. It's probably time for longer term investors to take a few chips off the table. I would not advocate completely exiting long positions, but there is a decent chance of decline back to 78, giving us better levels to buy back in for the next phase of this bull market. The risk is that my count is incorrect and the market will just keep on chugging higher. For this reason, it would be prudent for longer term traders/investors to stay at least a little bit long (maybe 25-33% of a max long position?).

Traders who want to short this market should use 81.91 as a "stop loss." Alternatively, those who want to stay long this market should use 79.50 as "stop loss." That 79.50 has been good support for awhile now, hasn't it?

I don't have a report on the S&P because there's not much new here from last week. The market has not yet "peaked" and seems destined to print a 1200 handle. Short term support for the S&P futures is now 1183 and 1171. So, it won't make sense to bail on length or initiate shorts until 1171 is taken out on the futures.

Hope everyone had an enjoyable weekend. Good luck in the week ahead.

DXY Report 11 April 2010

34 comments:

call me ahab said...

well Andy-

I had a great weekend- beautiful weather in DC the last 2 days-

anyway- this-

"but there is a decent chance of decline back to 78, giving us better levels to buy back in for the next phase of this bull market."

so Andy- are you recommending dip buying- I hear it's all the rage(-:!!!

call me ahab said...

. . . and this-

"Greek Rescue Plan Could Give Global Markets a Major Boost" - CNBC

irresponsibility is the new "cool" thing-

it's a global phenomena!!!!- lol

DL said...

"...it won't make sense to ... initiate shorts until 1171 is taken out on the futures"

Count me in on the short side if ESM0 makes it to 1202 this week.

call me ahab said...

wow- and this

"Phil Mickelson Wins the Masters Golf Tournament"- CNBC

it's interesting that this is a CNBC headline- but maybe the idea is that the financial types are golfers and so of interest to their readers-

or possibly- it's the weekend with no market news outside a "new save" for Greece

karen said...

Tomorrow should be anything but boring with the dollar below 80.50 right now.. here are a few words on gold from someone I once subscribed to years ago: http://www.kitco.com/ind/akerman/apr082010.html

Mickelson won the Masters!!! how is that for great! (my friend is his chef, laughing at my claim to fame.)

DL said...

Aha @ 7:16

Nothing new there.

That's what Darren Rovel is there for.

(Most sports fanatics would probably consider it a dream job).

call me ahab said...

karen-

six degrees of separation-

http://en.wikipedia.org/wiki/Six_degrees_of_separation

McFearless said...

I shot a legit 96 today. I drank more beers than I had pars though. I bet there is valuable information here but I'll have to wait until tom. to undrstand any of it.

karen said...

ahab, you know Steven, or you know Phil? or, you know someone who also knows Phil? In other words, what are you trying to tell me?

McFearless said...

lol, look at futures, is that like 100% promised anymore that Monday's are up days.

So easy, a caveman could do it.

McFearless said...

If AT said buy the dip on the dollar to 78 I agree completely.

call me ahab said...

karen-

exactly- I know you (from this blog) and a chef you know cooks for Mickelson- and then there is Mickelson-

that is one, two , three degrees of separation-

the idea is that w/ six degrees of separation everyone is connected(-:!!!

karen said...

ahab, you didn't have to reference wiki on six degrees of separation.. futures are nuts.. i am crabby! look at copper!

call me ahab said...

well karen-

it's my inner hoffer that's coming out(-:!!!

anyway-- relax- concentrate on each breath- think of nothing else-

it will calm you(-:

karen said...

picked this up on bloomberg: “We continue to believe that lower-priced homes bottomed last year,” said Scott Simon, head of mortgage-backed securities at Pimco, in a commentary posted on Newport Beach, California-based Pimco’s Web site. “Higher-priced homes should bottom later this year. If one labels recovery as prices rising dramatically, we do not foresee that anytime soon.”

Nic said...

Great report Andy!

Madness tonight but this article has just come out and this guys is well read, even if you don't agree with him.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7578938/The-Greek-people-are-being-punished-for-Europes-errors.html

Maybe just a spike down, see what the dollar does in the morning

karen said...

Andy, just went thru your dxy report.. you had my full attention from page one! bring a dog a bone and watch her tail wag !! (me and my MAs.)

I-Man said...

Great to see some AT!

And I humbly agree, re: the USD giving a little back to Mr Market.

I went a bit overdrive on the charts this weekend, and have a tidy stash of new material over at Dread Capital, which I will shamelessly plug amongst friends... Now:

http://dreadcapital.blogspot.com/

There are looks at the SPX, USO, and GLD... for anyone interested in a little good ole fashioned, clean fun with rulers, pens, and price charts.

I-Man is feeling a bit "risk on" this week, but you never know, with that imaginary steamroller just a stiff-arm away. Trade like ninja, one must, to successfully game this batshit crazy tape.

I think we see the dollar pull back, SPX make a run at 1230, GLD continue to trade higher, and USO breakout to the upside.

QE2I folks... QE2I.

Lets get jiggy wit it.

call me ahab said...

jesse's cafe-

"Trader Blows Whistle On Gold and Silver Price Manipulation"

"The story gets sticky in the States because, as disclosed in the motions in a New Orleans trial, the players filed a motion claiming immunity because they were acting in partnership with the Treasury and the Federal Reserve, and other central banks who were not within the Court's jurisdiction."

http://jessescrossroadscafe.blogspot.com/2010/04/thanks-to-ny-post-for-breaking-ranks.html

karen said...

Voldemort isn't going to like dollar down and treasury yields up..

call me ahab said...

. . .as an aside-

re my last post-

New Orleans- I love that town-

I would like to figure out a way to live there during the winter months-

although Virginia is not the "far north"- it does get cold- and this last winter was a show-

I'll need to noodle this a bit

Andy T said...

@karen:

I knew you'd love the nod to the MAs.

I feel a bit "cheesy" putting out a report on the Sunday that there was some "newsy" bearish things for the DXY. FWIW, I actually wasn't even following the Greece stuff and didn't even realize there were "big meetings" going on.

Technical Analysis assumes that the people "in the know" already know the way it's going to go down and have made their bets accordingly. "Newsy" crap is normally anticipated by Mr. Market.

Andy T said...

Friggin' great Masters.

We're big Phil Mickelson fans in this house. I absolutely love the way that guy plays golf. I still firmly believe that when he's play his best game, he's better than anyone else playing their best, including Tiger.

Some of his shots this weekend were out of this world....

karen said...

Andy, that loan deal was already leaked on Friday.. There really is NO NEW NEWS.. Greece still plans to sell debt and not tap the aid package.. which isn't large enough anyway.. and the real problem is repaying, isn't it?

karen said...

Andy, as you say, ignore the news.. it was actually EUR bearish, imo, but let them cover/grab their profits and this whole thing will reverse again... the EUR isn't impressing me yet.

Andy T said...

@karen....

"the real problem is repaying, isn't it?"

Indeed!

If you give a bum (Bless them) at the intersection a $1mm dollar loan due in 5 years with a 0% interest rate, there is very little chance you'll be repaid on that note....

The issue isn't the interest rates or the willingness to lend money; the issue is solvency.

There are numerous states/countries around the world that simply need to either:

a) radically reform their cost structure; or,
b) sell off their assets to pay down the debts.

karen said...

Read and weep: Who Gives a Hafa

Anonymous said...

Although I am(was) Tiger fan, I'm glad Mickelson won. He's got my respect. I hope his wife get better soon.

karen said...

This is from Twitter.. I am so NOT ON BOARD.. and I cannot get on board.. so i'll just close out and sit out soon, i guess:

A few $BAC preferred issues have great charts breaking out- gives context to $BAC common's chart. I expect uptrend resumption into 20s.
14 minutes ago via UberTwitter
Going long $VMW tmw... $CREE $NFLX longs look ready for uptrend resumption if this mkt keeps going up (looks like it will)
35 minutes ago via UberTwitter

Nic said...

For you Karen: Profit for Banks Dimmed by Home-Equity Loss Seen at $30 Billion
http://ow.ly/1xg8G

Nic said...

IMF chief - Deflation the only option for Greece:
http://www.reuters.com/article/idUSLDE63B0CY20100412

Maybe I am a DB but isn't that the best option for everyone? Yet we keep printing away ...

Nic said...

US faults Regulators over WaMu
http://www.nytimes.com/2010/04/12/business/12wamu.html?ref=business

Nic said...

And the Greek tragedy continues.
First Greece says it may ask for EU loans as early as today. Then the German Govt says that the loans are only if Greece cannot raise the money themselves (they must want the EUR lower and a failed bond auction!)
http://imarketnews.com/node/11620

CV said...

NEW THREAD UP - ANDY'S CHART STAYS ON THREAD

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