The Dollar has been taking some time off since March and consolidating the Monster move up from last May when it completed its 4 year cycle low. I am pretty sure that we have seen the intermediate term bottom with maybe one more minor push down. The dollar strength should act as a tightening mechanism for global credit and kick off another round of risk off in emerging market equities and debt. I suspect the energy complex will get destroyed so I will be looking for shorts there. The general equity market looks very tired and has technically very weak momentum. I suspect more chop with a bias lower. I have started a long dollar position yesterday and will add on weakness. My longer term target for the DXY is 120.
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Commodities including metals will get smoked, if that happens. And Gary Savage has the exact same target for USD.
guats,
I am not familiar with Gary Savage. I will check him out. If i am right on the dollar the implications are massive .
Blue,
time frame on dxy 120?
@gauts ‘including metals’?
There are a bunch of industrial metals, and there is gold. You will notice the difference in due course.
@bluestar Gary Savage’s calls have been so bad he took his blog offline, and went private. Don’t waste your time, the guy is a snake-oil salesman type.
Jimmy,
I am expecting over the next 12-18 months. But I am leaning towards 12 months.
@GM, gold or not, all metals are in dumpster for now. Going fwd, things may change or may be not. OA is bullish on Copper and Aluminium and Steel has been a loser so far along with gold.
Everyone who listened to Gary Savage between the years of 2010 and 2014 lost a fuck load of money.
Bluestar: I agree with your thesis but think you are early…possibly very early. When the debt defaults in euroland pick up speed, will this not vaporize a lot of EUR? Same can be said for Japan and their yen. And pound. Even CAD, soon enough. DXY is not trade weighted.
The US can reverse course on QE quite easily and the fed balance sheet has a ways to go before it gets truly ridiculous. From a PR standpoint, anyways.
BlueStar, I always enjoy reading your commentary. I know you ran a big name fund, was curious the path you took to get there.
Blue,
What do you make of the extreme divergence between transports and the rest of the market? Seems like something has to give here. The divergence can’t continue on like this.
PB,
I will do another post later with charts outlining my thinking.
Dewey,
Bond sales out of collage-MBA- then DLJ-then buyside as analyst- then PM.
Quality,
The longer the divergence the chances of a 4 year cycle top exponentially increase.