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Strategies & Market Trends : The Player's Club
SPY 683.04-0.1%Dec 9 4:00 PM EST
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To: GROUND ZERO™ who wrote (2984)12/16/1999 4:51:00 PM
From: pater tenebrarum  Read Replies (1) of 11513
 
another aspect of all this is the dollar/euro relationship...the Euro has been technically weak, but in the meantime the fundamentals have turned in it's favor. to wit: the growing Euro-zone trade surplus with the U.S. (more exploding than growing actually), the decision by the HK monetary authority add more Euros to it's forex reserves and growing evidence of the Euro-zone economies picking up steam. i believe it's mainly Russia's war with Chechnia that had the market worried and from all accounts the Russians will have razed the place to the ground any day now - sad for the Chechens, but it also means the war will soon be over. once that's out of the way the Euro could be subject to a quick turnaround. and that's not good for U.S. treasuries and it may even be worse for stocks.
if you look at a weekly chart of the DM as a Euro proxy, it has made a classic 5-wave down move from the October '98 high. the forth wave, which was a corrective a-b-c rally took place exactly in the time frame from the July high in the stock indices to the October low, which was also the low for the move of the bond at the time. in fact the negative correlation of the Euro with U.S. stocks is almost perfect. if the fifth wave down has ended, we should get quite a durable rally from here, and concurrently a correction in the stock market.

hb
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