Russell,
Thanks for the Dollar update. The dollar slipping to 127 versus the yen in one day of trading (Today) is very serious, and could create a very rapid mass exodus of capital from U.S. financial markets as Japanese investors attempt to avoid further exchange rate loss on their U.S. investments as the dollar continues to erode versus the yen. (That is, if they believe the erosion will continue, which I think they certainly do, and BOJ certainly has the power and desire to make it happen).
Looking at the dollar futures chart, I see a highly reliable reversal pattern where prices since late February narrowed into a symmetrical triangle, then the upside break creating a bull trap ocurred March 30th, taking the June dollar contract to near 102, which was of course the target of the symmetrical triangle break. Since the target was fulfilled on April 2, the dollar contract broke lower to as low as 99.60, before bouncing a little on Friday up to a 100.22 close (also providing support on Friday for the Bond & Stock Markets). The gains of this bounce in the dollar will apparently be eliminated on the open of trading Monday, and should have the desired impact on the U.S. Stock Market.
Preliminary Targets for the U.S. Dollar future Contract (June) would take the contract down to 96.25, with the ultimate target down to 94.10. So in other words, all foreign investors who have capital invested in the U.S. would lose 6% of their capital invested in the U.S. if the market traded flat while the dollar fell to the 94.10 target (little do they know that that's not going to happen.... that is, the market staying flat :o)..or then again, maybe they do!!)
This is certainly the Easter weekend external event that was mentioned in a prior post that would be necessary to spawn dramatic selling in the market Monday with a vengeance. Globex trading Sunday Evening on the S&P should be quite interesting, with a downside break of 1112 sealing the S-T fate of this market. The ultimate downside target that many of you now are aware of would be activated as the June S&P's take out 1095 on the downside.
Should be quite interesting indeed!!
David |
