Today's chart of the day was just sent in by a friend. He thinks that we have now entered a capitulation phase on the Euro. In other words, what he is saying is we could be making a final sharp sell off before EU politicians come out and "fix the problem" by kicking the can down the road. Supporting evidence is that the markets position is extremely negative on the Euro and ripe for huge short squeeze. What do you say - Euro bottoming and further Dollar rally?
Retest of $1.20 by Q1 12.
ReplyDeleteI keep reading the Euro is going to break up or be abolished. Soon. $1.30 to the US Dollar is all it can do in here? Who is buying this worthless currency now and what do they know that the sellers do not?
ReplyDeleteShort sellers trapped, looking for the last few cents down. Could be very expensive last few cents.
Who is buying this worthless currency?
ReplyDeleteI'll tell you who wants it. China wants the Euro to stay stronger than the US Dollar. It enables Chna to run a trade surplus and build its reverses. US wants a strong Euro coz Bernanke, Obama, Summers and the rest of the clowns have been extra busy keeping the Dollar devalued as much as possible. And finally, Germany wants a strong Euro ala D-Mark. Germans are more worried about purchasing power than property prices or stock market performance.
Therefore, if you have Chna, US and agermany wanting a strong Euro, in the long run, you will get a stronger Euro than the US Dollar.
I'm becoming intrigued by the Euro because the latest COT report shows the net longs by commercials to be at the highest level in over 5 years, while the net shorts by small and large traders is at the highest level in over 5 years. Could have some sort of rally. Look at the effect on stock markets and metals in October when you had the last Euro rally.
ReplyDeleteAlan
Alan, I totally agree. On top of that, imagine how many Johnny Come Lately's are piling into Euro shorts right now as we speak. It's the wrong thing to do, but they are doing it at the perfect time when a super short squeeze could trigger a bottom!
ReplyDeleteI think support between $1.29 and $1.26 will hold. If we do drop a few more days or so, we will become extremely oversold!
the short interest was high on Enron too - sometimes there is a reason everyone gets short - short that Wheat and all other commodities
ReplyDeleteNoticed that the latest DSI bulls on the Euro is 6% today.
ReplyDeleteTom - I'm long Wheat and all other Agriculture. There is no reason whatsoever to short commodities!
ReplyDeletesomeone has to take the other side of the trade
ReplyDeleteEuro ETF (FXE) has broken a 15 month old Head & Shoulders Neckline, the Euro is approximately 80% inverse of the USD
ReplyDeleteThe (FXE) ADX indicator line is above 20, +DI below -DI indicating a Downtrend, in a Trending market oscillators/momentum indicators will be useless
“Trend Traders” would also be negative on (FXE), with the 20 EMA below the 50 EMA below the 200 EMA, ( 20 EMA < 50 EMA < 200 EMA )
The Hurst 212 day cycle on USD ETF (UUP)has bottomed
The Numbties kicking the can down the road = how much Runway is left
~$~ 2012 Great Escape on Dollar Strength ~$~
InvestorX
Tom - I agree! I would hate to be following consensus, when I see food prices going up 3 to 4 times higher from here over the coming years.
ReplyDeleteInvestorX - everyone is negative on everything. Cramer was bullish for ages until last night, when he started panicking on CNBC - he is usually a great barometer for all the mums and dads at home. If we haven't already washed out, we will in coming days to a week.
Agriculture is most depressed historically, a very much beaten down! You should look at that sector for investment...
I will look at some Wheat once it gets below $5 a bushel - I will come back to you then and let you explain how great that trade was
ReplyDeleteFor sure! ;-)
ReplyDeleteAuf Wiedersehen Euro!
ReplyDeleteInvestorX