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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: TobagoJack who wrote (179782)7/15/2002 9:18:04 AM
From: Haim R. Branisteanu  Read Replies (1) of 436258
 
Jay , my take on the EUR is nothing more than pure momentum play with busting the stop losses to the upside. Trend following worked miracles for the last 6 years for everyone ignoring fundamentals. It works now for the EUR and YEN and shorting the SPX.

The bank I work with just told me that no one is buying EUR's only stops are busted all day long.

Keep in mind that many real world entities are placing those stops to hedge their imports / exports with EZ

IMHO most Hedge funds are in the game as arbitrage between the US stock market and the EUR and YEN. There is an almost 100% correlation between the SPX and those currencies.

Usually those guys strategy is going against the reason sucking in the masses, placing stops just below the purchase price, buy more, and succeed. It is not much different than during the DOT.COM bubble.

In the meantime the Eurocrats are happy thinking that the markets have found their new trust in EZ ignoring the fact that their economies are hurting.

Except inflation which is moderating in EZ nothing justifies the 15% or so rise in the EUR.

On July 4 the EUR was 0.97 USD and now 1.0045 or 3.5% in a week, with more bad news emanating from Europe.

As every excesses the reversal can be very painful............... and I am long a substantial bunch of EUR but hedged down to 0.98 which may be to close.

IMHO the US economy will rebound quite quickly as a result of the low USD, and tourism to EZ will decline substantially (see airline stocks ).

It will be interesting to see what AG testimony will do to the EUR. Last year AG testimony run the EUR from around 0.84 to 0.91 this year it can do the reverse.
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