Transcendental Market Truths (Fragments):
Currency Markets:
The currency markets are far too large for either Obama or Beranke to manipulate. And, there is a definite trend in the current markets, a trend to the upside in the Dollar and to the downside in the Euro. There is also the potential for the Yen to be joining the Euro in the downside trend, but that's a bit iffier to confirm. I say this since the Yen has been in an uptrend ever since about 1950. That means it's a 60-year trend. Turning a 60-year bull market into a bear market takes time. But, with the Japanese economy very vulnerable to a trade war and a trade war appearing to be the most likely next move in this depression, the Japanese Yen will likely lose a very large chunk of its gains against the dollar. So, that's why I'm short the Euro/USD and nibbling short JPY/USD) and the stock equivalents, EUO, UUP (long DXY) and YCS (short the Yen).
Yes, no market goes in a straight line forever, but currencies tend to retain their trend literally for years, which is why I favor a long term hold on positions, adding new money on retracements. At this point, the euro is going to have a very tough time regaining its former strength since it's been shown to be a paper currency with no solid legal standing to unite the countries who bound their honor (but not their honesty) to implementing the single currency.
Stock Market:
Although it looks pretty toppy here, a pullback for a few days could present a buying opportunity for a renewed run up into May, so never say never for another rise. The storm clouds are on the horizon, but I have no intention of shorting the market too early as Jesse Livermore did. He said he saw a pile of cash, a wheelbarrow with the name of his company printed on it (Livermore Trucking) and a shovel sitting beside it, but he saw it through a telescope. By the time the market got there, he was busted trying to short and rudely having to take a loss as the market roared to a higher high. I wouldn't bet against someone who claimed the market could make a new all-time high at this stage. After all, the Value Line came within a hair of doing just that on Monday.
I'm going to need to see a lot more evidence that the internals in this market are deteriorating before I can reasonably declare a top is in place.
The market formed a double bottom and the top should echo that in forming a double top which should be completed by late August or early September at the latest. After that, there's no real support underneath the market. That implies there is some huge catalyst waiting out there to trigger a massive leg down in stocks. At this point, a trade war between China and the US looks a likely candidate, but it could be something else. A resignation of Obama would not be my first choice for a big market-moving event, but when the bricks start falling, it's hard to eliminate causes.
In any case, when markets tumble, investors flee to the safe haven currency, the dollar, and I wouldn't want to be in any position other than the dollar if chaos is going to hit the market once again. I saw in the last crisis that Gold was no protection at all. It doesn't look like Gold will be providing that safe haven considering the number of Gold commercials appearing on radio and TV. |
