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Strategies & Market Trends : The Options Box

QQQ 611.67

-1.9%

Nov 6 4:00 PM EST

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To: Poet who wrote (10025)	3/13/2001 8:42:27 AM
From: Lee Lichterman III	Read Replies (1) of 10876

We have been talking about this also. Basically each time the Fed lowers interest rates, it weakens the US Dollar unless all the foreign currencies also lower rates. Basically it has to do with where foreigners park their money to get the best and safest return. The US tends to keep rates slightly higher than most other currencies so that keeps them parking thier money here which also allows us to sell them bonds and notes so we can give them our debts. Now if the Fed lowers rates to try and save the stock market but Europe doesn't lower like what just happened in teh last few weeks, then the dollar drops in value, some foreigners repatriate their money to home shores and since foreign money is also in our market, it is like having a lot of mutual fund holders closing accounts and selling stocks. Foreigners get a double gain or loss in playing our stocks because they are traded in US Dollars. A strong dollar allows them to make money in exchange rates even if the stocks stay flat. A weak dollar and also a weak stock market makes them lose twice as much as we do since they are also losing money in exchange rates. What is of concern on the US Dollar chart is a big Head and Shoulder formation of which we are forming the right shoulder at this time. We have been watching this now for weeks. His target of 104 would pretty much just complete the formation ( I show about 105 but that is close enough) The real threat is if the H&S completes and then breaks to teh norm which would be down to around 95 or lower. It is most clear on a weekly... marketswing.com Hope this helps. Good Luck, Lee

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