Dollar broke the downtrendline

Nearing a swing low.

The Dollar Is Set to Rise

Sorry for not posting in a while, my real job has kept me busy.  The dollar has made a swing low for I believe the next 6 to 10 weeks, and with that we should see pressure in the oil, commodities and emerging markets.  This is coinciding with the end of the insanity of the Europe hope and dream campaign.

I took on three trades today, EDZ at $23, DTO at $57.50, and FAZ at $50.  I closed FAZ for a quick profit and trimmed DTO a bit, but am ready to add to all three with a break in trend on the dollar.  It was gratifying to see Tim (www.SlopeofHope.com) mention EDZ today, as it is my favorite risk off trade.

If you value cycle theory as I do, we can expect a larger than normal move for the dollar.  This will crush gold and silver, as well and bring us to some compelling buys in both towards year end.  Here are some charts as reference.

Dollar is Still the Key For Me

A bit of a weird day for me, The midday silver sell off in sympathy with oil, was a head scratcher, and my AEM, GDX, and GG positions getting hit hard was no fun (GDXJ was OK though).  To top it off, I have a long dated put position on CMG, although still profitable was painful to watch, all with a chest cold.  Such is life in this business.

But, I do not know what imbalances or repositioning happened today, so I keep my cue on the dollar to guide me.  The dollar looks like it is still contra trending, and crawling up the underside of the 90 day LR band (chart one).  I will reduce position size if my line on chart two is violated.

On the plus side Natural gas is stirring, and Uranium is still beating to its own drum, although they look a little stretched.

Dollar Fail?

If the dollar stays below this line, it indicates to me a fail and my trade is to get longer hard assets.

Swing Low for the Dollar?

The collapse of the long bond must have policy makers very concerned, with the banks not lending, and holding bonds to play the spread for income, marking capital losses on your bonds does not move you forward on your capital ratios.  Plus, with the 10 year backing up you can kiss the mortgage and real estate markets bye-bye, further pressuring the banks.

So what to do?  Well, nothing like a good scare in the equity markets by strengthening the dollar to take some of the pressure off.  Conjecture aside, I am safe in saying the dollar drives all, and the persistent strength is starting to take its toll.  Today it  (the dollar) hit a swing low, as I understand it, and I became even shorter in my portfolio.  Below are some landmarks for me.

I will post some trade ideas after I have a chance to reveiw my charts and filters.