Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Sharp Moves in Currencies Could Be Followed by More Sharp Moves -- In the Opposite Direction

By

The fixed income and currency markets suggest we may see a bit more upside in risk assets in the short-term, but that a reversal lower in risk assets / higher in safety will soon begin.

PrintPRINT
I've shared with clients recently that my upside target for the S&P 500 (^GSPC) is around 1,485 or so. A move to that level in stocks would fit well with the scenario where TNX moves up to 1.955% - 1.978%. Once we hit the resistance – the level at which a turnaround begins – I'm expecting a correction lower in rates. That move lower (wave v on the monthly chart) should take TNX down to at least a test of the recent low yields and perhaps even lower (it really depends on where wave v commences).


Click to enlarge

CURRENCIES

The euro / US dollar currency cross (EURUSD) has pulled off nearly a vertical rally over the last few weeks, causing a lot of pain for the euro bears out there. I do think it has higher to go still, but a corrective move lower should occur prior to further upside taking place. One possible pullback scenario is shown below:


Click to enlarge

US Dollar Index reflects the recent action in the euro.

It's the same story in reverse for the US Dollar Index (see below). The DXY has been falling off a cliff recently – clearly spurring the rally in risk assets on to new heights. It should move lower, but is clearly oversold and should see a corrective bounce soon. One bounce scenario is shown on the chart.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE