The dollar, which is the one market pretty much directing all traffic in the world of finance, continues to lose ground and is heading for its worst week since February. And don’t say I didn’t warn you. In numerous posts this summer, I have been pinpointing precisely the turns in the dollar and made bold forecasts that the dollar would weaken.
Naturally, this was a pretty contrarian stance back in June when the DSI bullish count hit the extreme 96% bullish count. Most pundits were convinced the only way for the dollar was north. In fact, they were right earlier as the dollar indeed did rocket – and we were riding that wave also. But the wave counts and sentiment extremes in July told me there was a high probability the trend would change.
For commentators without the benefit of my method of analysis that incorporates the Elliott Wave model, they were stuck telling the same old dollar bullish story. There was no bell rung at the 96.50 high. No dramatic new data point emerged. Nothing had seemingly changed at the top. So why did it turn then?
There are plenty of self-appointed gurus of finance, particularly in the good ol’ USA. Most are shameless promoters who target the gullible -and do it very successfully. I have just read about one that I hope you enjoy for its hilarious content. A lesson in how to make oodles of dosh – and still get every single recommendation 100% wrong. I wish I could do that. Sadly, I have to do it the hard way – and get most forecasts right.
Actually, I also had some contact with pretty gullible Americans when I worked as CTA in a small trading house in Los Angeles a while ago. Many called up wanting to know what the latest hot trade was. I would have told them anything. Here in the UK, traders are somewhat more sophisticatedbut where there does reside the real no-hopers is in the horse racing fraternity.
US stock indexes keep hanging in there, but are we close to a downside resolution? I note recent prominent commentators are full of Lehman Bank bankruptcy 10-year anniversary stories with a big TV production about to be unleashed. Actually, I would have preferred to have seen it before it happened, but of course, very few understood what was going on ten years ago.
With all this MSM coverage of the previous financial crisis – and gloomy forecasts for the next one – perhaps the time is not yet right to expect it. I mentioned to my VIP Traders Club members that a Mr Gordon Brown (of the Brown Bottom of gold fame) has just sent his doom-laden prognosis for the global economy. And that prompted me to introduce my new indicator – The Prime Minister Indicator. Since he gave us such a profitable contrary indicator in gold when he announced he was selling most of the UK pile right at the low, maybe he is really telling us the global economy will go on to bigger and better things.
But of course, that will not necessarily mean stocks will follow. In fact, with interest rates rising, stocks should be hit hard even as the economy improves. Ominously, here is the quietly rising US market rate
Remember, this is the open market rate, not the Fed-mandated rate. Since the Fed follows the market, it will be forced to raise rates sooner rather than later – and that should be a shock to the complacent stock bulls, That event should occur within weeks.
My post is a short one this week. I will be in hospital over the weekend having my hip replaced and really looking forward to being able to enter Olympic high-jump competitions again.