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Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives

SPY 693.87

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4:00 PM EST

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To: GROUND ZERO™ who wrote (47880)	3/27/2013 10:16:24 AM
From: ItsAllCyclical	1 Recommendation Read Replies (3) of 221698

US Dollar multi-year run scenario Pros 1) Most liquid/stable market compared to other reserve currencies 2) US showing more energy independence 3) EU is structurally flawed, Japan is breaking down and China has no desire to play a bigger role in for it's currency any time soon. 4) Technicals seem to favor further advance. Cons 1) US Dollar still over owned as a percentage of central bank reserves 2) Prior to 2008 crisis US was grabbing approximately 75% of world's excess savings to finance deficit. FED filling that role now but no way that's sustainable if/when FED needs to back off stimulus. 3) Take the Dollar Index back over 90 and see what it does to multinational earnings. Everyone piling into stocks to earn 3% dividend. That thesis will take a huge beating if the Dollar index makes it back to 90 for any length of time. 4) FED wants inflation. Dollar index at 120 again? FED will fight tooth and nail. I'd say they are happy with the Dollar index in a range say 76-90 area? Swag of course. 5) Dollar index is very heavily EU based. Biggest adjustments over next 10 years will come against Asia and other developing countries. Dollar index is interesting, but not nearly as representative as it once was. 6) Obama has reversed course from any real budget cuts. Republicans also kicking can down road. US is ungovernable at this point. Again I can see Dollar getting stronger, but it's already a heavy favorite short term based on COTs and sentiment. It's been the cleanest dirty shirt for a while now. Unless the EU breaks apart (possible) I don't see the US Dollar starting a massive multi-year run from these levels. A higher trading range? Quite possible.

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