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
How about Mexican stocks? The monthly chart below shows the iShares Mexico ETF (EWW) trading above both the downtrend line (red) and the previous highs (yellow boxes). As noted with the S&P, we may be nearing a short-term peak, but if EWW can hold the breakout (above both the trend line and the previous highs) into month's end it would move into the "buy the dips" camp very quickly.

The next upside target for EWW assuming the breakout holds will be $73.25 – from its current level in the mid-$60s. As mentioned in previous reports, the driver here seems to be the weakness in the US dollar versus the Mexican peso (USDMXN). As noted above, I'm expecting some sort of countertrend rally to occur once USDMXN nears support. However, despite whatever bounce we may see in that currency cross, I do see more weakness there in the intermediate to long-term – so the wind should be in the sails of EWW.


Click to enlarge

SUMMING UP

What I'm seeing in the fixed income and currency markets tells me that we may see a bit more upside in risk assets in the short-term (perhaps into quarter's end), but that a reversal lower in risk assets / higher in safety will soon begin. Look for signs of a reversal at this point – don't fall asleep while your opponent is going "check, check, check all night" as Mike did to Teddy in Rounders.

Twitter: @tttechnalytics

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
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