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I just thought I would put this out there to confirm I am aware of market actions over the past 2 days. Specifically in the USD. This has been driving both sides of the argument nuts for quite some time since nothing that is happening is consistent with what everyone on both sides thinks should happen. I have presented the argument of a stronger USD during a PBC. That’s a longterm thesis which I believe is intact, however the current market action in the USD failed to hold the lows I believed would hold. The 96.5 level has failed. Apparently the reason is foreign central banks have stated that they too will be able to raise rates making their currencies more attractive which has adversely affected the USD.
Now I don’t trade the USD so its not a trading position, but as far as the thought process is concerned for me personally, it’s time to go to the sidelines to regroup. I had stated earlier that if the 96.5 level failed the next level of support would be 92. Looks like that’s where we are headed, but I don’t claim to know. But here is the thing, those on the other side of the argument haven’t been satisfied either as the drop in the USD has NOT helped commodities or gold.
In the charts above one can see the USD has violated the mid point range of the consolidation. There is a thin reed of hope that it can hold here, but I wouldn’t bet money on it. I make this post in acknowledgement that I haven’t gotten the Intellectual case for this right (so far) and I am not living in La La Land.
As far as other trades are concerned, I am still short oil despite this bounce, but it does have the potential to rip to the upside in short covering fashion. Its now on a tight leash and I am still short TQQQ and SOXL. TQQQ has not yet broken its NL, but SOXL has. Both trades are in the money. I think TQQQ will drop, but we will just have to see. If it breaks I will cover the trade and very possibly go long as I think higher highs still may be in front of us.
PS…. I just covered a third of my oil short
Much appreciated and thank you. Appears there’s a direct inverse correlation between QQQ and oil. May be worth a look.
Well its playing out as you say for now…go figure????
I got lucky and took it:). Tech is now even pulling down oil. Nice spot to buy soon? Maybe. And I hesitate to even mention this…USD gold. Possible once the USD finds its footing gold will fly with it at least for a time like 2005. The leak in tech found a home in oil and I’m wondering whether it my be time to rethink other correlations. How about bonds and gold. Maybe we’ve seen the end of the long bond trade and that leaks into gold since you seem to think at least tech has reached a peak. I don’t know just wondering whether all these sure thing correlations may change soon.
No I am not claiming tech has peaked. I just see a “crack” in the markets. After we will just have to see, but if we get a big downside day near that measured move, I will probably go long. I am in the bond camp along with Lacy Hunt. Yields eventually go lower as they cannot be sustained. They can jump around a lot in the meantime like they are doing now.
As far as all of those ratio correlations you speak of. That’s just too many moving parts for me to analyze, I am just keeping my focus narrowed to whats working for me.
Understood. The USD/GOLD is what I’m watching now. But, I don’t know. That gap was filled on TLT and that may be it for some time which means higher rates and that has to mean something significant for all markets. Even if I’m lucky to have spotted the issue, I can’t be sure what it means.
Brilliant. Thanks Fully.
Tech got way out ahead. SMH esp. But I too don’t think tech has topped for good. Crack sounds about right.
As for bucky, we’re now sufficiently OS on weekly that we COULD be forming a bottom here (UUP basis).
But I’d be looking for more divergence action before feeling confident to trade it (or the thesis). So lower and/or more time, looks likely to me.
Re crude, the whole sector looks ripe for more, but the bounce doesn’t appear to be sufficient to change the trend here. More downside seems probable … but … R/R will soon favor longs imo.
This is very admirable Plunger! I have quoted the following every since I heard you state it a while back. “What do you do with your opinion when the facts change?” Stephen Hawking once said “Intelligence is the ability to adapt to change” Your QQQ trade has been something to follow.