Investment Strategies For Peak Dollar
Monday, 18. August 2008, 03:36:32
Stock market report for the week ending Friday August 15, 2008
Introduction
Peak Dollar likely occurred Friday August 15, 2008.
As the US Dollar falls lower, the recently purchased consumer, bank, and housing stocks and the USD/JPY will fall.
As the Bank Investment Rally and Dollar Rally ends the emerging markets, the BRICS, and the EUR/JPY will rise.
Multiple systemic risk event potentialities exist as does the likelihood of a war with Iran over its nuclear ambitions.
A wealth preservation strategy is developed below.
Ongoing stock charts show Monday August 11, 2008 to be 'a type of Peak Wealth'
This week saw investment desire peak on Monday August 11, 2008 due to increased risk aversion to debt at banks and investment bankers
The ongoing Yahoo Finance five day chart of the financials, IYF, compared to the the consumer discretionary stocks, VCR, and the S&P ... IYF, VCR S&P
The ongoing real-time Yahoo Finance 5 day chart of the Russell 2000 ... Yahoo Finance Russell 2000
The ongoing real-time MSN 5 day chart of the Russell 2000 ... MSN Russell 2000
The ongoing real time Yahoo Finance 5 day chart of the S&P, the Nasdaq and the Russell 2000
The ongoing real time Yahoo Finance chart of the Banks, KBE ... KBE
The doji in the parabolic rise in the chart of the US stocks relative to the world stocks, VTI:VEU, suggests that the Dollar Rally is over.
Weekly charts Show The Stock Market To Be Trading On "Thin Ice" -- Ice So Thin It Can Give Way Any Day Sending The Markets Lower
Russell 2000 Value, IWN, being comprised of US based companies highly dependent upon and reflective of the financial sector, rose strongly. It has been ground zero for the Financial and Rising US Dollar Rally.
The weekly chart of the Russell 2000, IWM shows the effect of five weeks of the the US Bank Salvation and US Dollar Rally.
The daily chart of the Russell 2000, IWM, shows a bearish harami, and rising price on falling volume, suggesting that a change is at hand.
The Nasdaq, QQQQ, rose to 50 day moving average.
The overall stock market, VTI shows a positive doji.
The financial sector, IYF shows a negative doji.
Home building stock, ITB, shows a questioning doji, on falling volume. The daily chart of XHB, shows a rise to 200 day moving average.
The S&P 500 Large Caps, $SPX, shows rising price on falling volume in a wedge that has reached strong resistance at $1300; this relates rising aversion to stock investing; the rising dollar having no place to put its gains, will now fall.
Home Depot, HD shows a rise to 50 day moving average.
Autozone, AZO shows a long legged doji at an all time high.
Health care REITS, HCN, has rallied as part of the Dollar Rally; its rising price on falling volume, and its bearish harami suggests the end of the stock rally and this is likely to pull the US Dollar down.
In contrast with the US Stock market which has been rallying, the world stock markets, EFA, have seen increasing disinvestment as the world currencies have fallen.
The weekly chart of the US Stock markets relative to the world stock markets, VTI:VEU Weekly, shows the power of the Dollar Rally and suggests a correction is coming.
It's uncanny: First Solar serves as the canary in the stock market coal mine it always pops or drops at market turns. FSLR. Look how it turned right before the end of the TAF rally on May 19, 2008; then it turned lower on June 23, 2008, as the yen carry traders sold out of the BRICS, EEB:VTI, and now it's gravestone doji, relates the current rally is done and over.
The chart of EEB:VTI tends to confirm, with today, a likely Elliott 2 wave down, ready for a little rise to an Elliott wave 3 up.
Note the bear cross on June 23, 2008; this was when disinvestment really picked up steam as the minutes of the May 19, 2008 Bank of Japan got fully read and understood that rising inflation is an investment risk concern.
Note also, the bearish engulfing on July 24, 2008, in the chart of EEB: this was 'Peak Currencies' and then on August 7, 2008, an Elliott Wave 3 of 3 Down began in the EUR/JPY.
The US Dollar rose strongly trading today ... Today, August 15, 2008 was likely 'Peak Dollar'
The ongoing real-time INO real-time chart of the US $ Index.
The ongoing real-time twenty four hour Kitco.com chart of the US Dollar, $USD.
The ongoing real-time Yahoo Finance 5 day chart of UUP shows a close at 23.92. UUP
The ongoing real-time FXStreet.com hourly chart of the USD/JPY.
Stockcharts.com shows the US Dollar closed on August 15, 2008 at $77.15. $USD Weekly $USD Daily
The US Dollar certainly closed the week out strongly; but the overall stock market has been unable to benefit from its strength due to rising risk aversion.
The liquidity only flowed in a limited number of consumer sectors such as housing, XHB, and consumer discretionary, XLY, the Russell 2000 shares, IWM.
Of note the daily Russell 2000, IWM, manifested a bearish harami, at the top of an ascending wedge. And the weekly Russell 2000, IWM, settled in almost a grave stone doji.
Now that options has expired, the yen carry traders will be taking profits next week on the stocks they drove up; and this will be a factor drawing down the US Dollar.
the housing such as Pulte Homes, PHM,
the value stocks such as Blackrock, BLK,
the financial stocks such as Nicholas Financial, NICK,
the consumer stocks such as Carnival Cruise Line, CCL and McDonalds, MCD.
the retail stocks such Home Depot, HD, New York And Company, NWY, and Childrens Place, PLCE.
I believe that the yen carry traders will be taking profits next week, that is beginning on Monday August 18, 2008, on the USD/JPY which has risen into a wedge to trade at 110.53 as seen in of chart courtesy of ActionForex.com.
Wedges, being inverted head and shoulder patterns, always break down; and the time is "ripe" for the USD/JPY to do so.
Great financial reward is coming to those who have shorted the USD/JPY.
As the US Dollar rose on Friday, gold went through the floor and silver went all the way, through the floor to the basement.
Gold, $GOLD, took a massive hit: it fell to $787.
The gold ETF, GLD, fell to 77.57
Silver ... it is called "Manic silver" and for good reason. It gets excited on market upturns and depressed on market downturns. Silver, SLV, got spiked down; that is like in volley ball spiked down. The spiking down can be seen in the chart of gold relative to silver: GLD:SLV weekly: gold became more greatly valued than silver today.
Silver, SLV, got pushed down so hard that it fell to the level below the October 8, 2007, Citigroup CDO Bust.
The years running yen carry trade came to an end on July 24, 2008: It's termination is seen in the chart of the BRICs relative to the US Stocks, EEB:VTI
EEB:VTI shows the end of the TAF rally came on May 19, 2008 on the very day the Bank of Japan met to discuss its interest rate policy. EEB:VTI
Risk aversion arose and disinvestment came out of the BRICS as yen carry traders became increasingly concerned about rising inflation. And then in June even more so as the minutes of the minutes were released and carried by CEP News and others on currency trading sites such as ActionForex.com where inflation was presented as a rising risk factor.
Nevertheless the Bank of Japan decided to keep its rate at 0.5%; the reason being it is to their advantage to keep the forex lending window (that has been so profitable to the banking elite) going.
Then came a sell off of oil by the yen carry traders on July 14, 2008 to take profits. This produced a bust of the natural resource stocks such as the energy producers, XLE, and the energy service companies, OIH, the metal manufacturing companies, XME, and the gold producers, that is the HUI indexed precious metal mining shares, GDX.
And this started a Financial and US Dollar Rally where the consumer stocks such as the banks, KBE, the consumer discretionary, VCR and XLY, retail, RTH and XRT, and the homebuilding stocks, XHB, rose.
For a change, the United States became a destination for interest rate differential investing beginning on July 14, 2008!
Then on July 24, 2008, the yen carry trade unwound, and then on July 25, 2008 Peak Currencies occurred, really picked up the pace of the unwinding of interest rate differential investing in the BRICS, especially in the commodity currencies, such as the Euro, FXE, the Australian Dollar, FXA, and the Canadian Dollar; and further enforced bearish disinvestment from the commodity shares listed above.
This sea change of an unwinding of the yen carry trade has rewarded those long with EEV and FXP.
The chart of EEV which is 200% inverse of the emerging markets rose beginning May 19, 2008, and then rose again on July 25, 2008. EEV
The chart of FXP which is 200% inverse of China boomed as Peak Currencies disinvested carry trades out of China as the US Dollar Rally took off. FXP
Now with the ending of the 'Dollar Rally', the BRICS and the EUR/JPY will rise
As the US Dollar, $USD, rally ends, the world currencies, specifically the commodity currencies will rise.
The Euro, FXE, the Australian Dollar, FXA, the Canadian Dollar, FXC, will rise together with the EUR/JPY, FXE:FXY daily, FXE:FXY weekly, which is the barometer of the yen carry trade.
The chart of the EUR/JPY -- FXE:FXY, shows that it has fallen to a temporary level of support.
Thus we will see a temporary decrease in the bear market ETFs EEV and FXP; they have risen 47% and 42% since May 19, 2008 when the TAF rally ended.
We will be witnessing a 'death spiral' of the world currencies and the US Dollar all falling lower into the Abyss together.
An ETF investment strategy
The EUR/USD finished the week making more than 50% retracement; Yes, in one month it has reclaimed 50% of the range it took 11 months to build, therefore the Euro, will now take a bounce higher.
The Euro will be rising. The EUR/JPY, FXE:FXY, will be increasing.
Increasing EUR/JPY Investment Strategy
One should now go long the emerging markets by going short their bear market ETFs
1) go short EEV ... EEV ... go short from 91.15
2) go short FXP ... FXP go short from 90.11
Here is the chart of EEV weekly: haven risen to a nearly an all time high, with rising price on falling volume, it's time to take take some profit here.
The US Dollar, $USD, and UUP, will be falling. The USD/JPY will be decreasing.
Decreasing USD/JPY and Decreasing Dollar Investment Strategy
One should now go long:
1) go long DGP ... DGP which is 200% gold
2) go long SKF SKF which is 200% inverse of the financial sector
One should now go short the US housing sector
1) go short on XHB which is the housing sector as it has been at the forefront of the dollar driven financial and consumer stock rally since July 14, 2008.
Gold relative to currencies -- gold in terms of currencies
Gold in terms of the Euro, GLD:FXE, has fallen to the December 2007 level.
Gold in terms of the Yen, GLD:FXY, has as well.
Peak Dollar means the world currencies, especially the commodity currencies will now rise
The Canadian Dollar, FXC, got knocked down to last September's value.
It was three black crows for the Australian Dollar, FXA.
The Japanese Yen, FXY: it via the Bank of Japan 0.5% lending window has been the 'fulcrum of wealth', that is the center piece of interest rate differential investing.
The Euro, FXE, fell to support at 146.96.
The British Pound, FXB, once the world's governing currency, got severely hit: it's now the "dog" of currencies. Strong kings and monarchs have ruled Britain, could a "strong sovereign" rise again in Britain? ... Only time will tell.
US Treasury Bond analysis
The Dollar Rally was so strong that it took the US Government Bond ETF, TLT, higher -- it should have been going lower during the rally.
I am convinced that a run on the US Treasury bonds is underway: The topping out on March 18, 2008, of TLT came as the bond marketplace declared a defacto interest rate hike in response to as the Fed's provision of TAF, TSLF and PDCF facilities.
The interest rate on the 30 year US Treasury Bond, $TYX, has been going down for the last three weeks of the US Dollar rally.
I expect interest rates to generally continue rising, and far, yes far above, what most analysts think. Yes interest rates will be rising ... the TIP bonds, TIP, have been falling with the utility stocks, VPU, as investors sell, based on fears of rising inflation.
Natural resource stock investing became a relic of the bygone era of fiat wealth on July 14, 2008
The yen carry traders sold oil, USO, on July 14, 2008 to take profit, just days before option expiration. This caused a sell off in the natural resource sector; and the metal manufacturing stocks, XME, saw severe disinvestment, as the commodity currencies were sold off as the currency traders shorted the EUR/JPY.
A wealth preservation investment strategy given that Peak Currencies and Peak Dollar have passed
Now with the dollar surge ending, and all currencies having sunk, an epic investment sea change is going to occur.
Peak Dollar means that the neoliberal floating currency exchange regime "has met its Waterloo", as a rally can only go on so far in the face of the onerous level two and level three assets at America's banks and investment banks, as well as rising inflation, and ongoing economic deterioration.
Gold is going to arise as the defacto international currency.
A rising ratio of gold relative to the international currencies, GLD:DBV, from 2.8 and going higher, will be clear cogent and convincing evidence that the neoliberal, floating currency exchange policies of Milton Friedman G-7 group, have failed ... GLD:DBV
Furthermore multiple systemic risk events and the soon coming war with Iran over its nuclear ambitions are reasons for investing in gold.
The investment demand for gold is seen in the following ratios:
GLD:VTI rising from 1.2
GLD:VEU rising from 1.6
GLD:RJI rising from 6.5
GLD:USO rising from 0.80
A sound wealth preservation investment strategy has two components.
First, I recommend a two-thirds investment in GoldMoney.com and BullionVault.com to protect one's wealth from multiple systemic risk event potentialities, which could occur at any time, and the financial dislocations that will come from a war in Iran over its nuclear ambitions.
Second, I recommend that one have a one-third investment in a trust account with investment in the section 'An ETF Investment Strategy' above.
As Herb Greenburg of Marketwatch relates, in article 'How To Keep Your Investments Safe', all ETFs should be in a trust account and NOT, repeat NOT, in a brokerage account.
Caveat: I am a blogger who writes about my convictions of gold as an investment. I do not receive or expect any compensation for the things I write. One should always consult a licensed investment professional before making any investment decisions.
For those who do not like using ETFs for short selling, I provide a a list of 100 individual stocks
Here is the Resourceful Bear list of stocks which represent excellent short selling opportunities that have risen with with US Dollar driven rally.
The investment professionals see things differently than I do; they are all, yes all very bearish on gold; and I am not; I recommend an investment in gold.
Corey Rosenbloom shares: Gold could come in as low as the $650 to $700 range ... as seen in this chart of gold.
Mike Sheldon relates: What's happening with gold should be no real surprise. Although I have stated many times that gold is money and gold should do well in deflation, and we are in deflation ... in the initial stages of deflation, leverage in everything is reduced by force. The Euro, Chart of the EURO, has broken the weekly trendline, but barely. Unless it reasserts itself, a drop to the 200 day Exponential Moving Average (EMA) near 137 might reasonably be expected. There is also support at that level from the last major breakout.
ActionForex relates: The EUR/JPY is set to take on the multi year channel support again. Spot gold looks set to take out 772 medium term support level and dive further into 600s region. Such developments will be important to solidify the current trend, i.e., unwinding of carry trades and flow of fund into dollar assets.
Tim Knight relates: I was premature to say the EUR would strengthen short-term. The fast and furious drop beneath the red line you see below simply continued. Congratulations to those short the euro! I drew a new retracement pattern this morning, and it seems to me this could keep falling until around the 1.44 level. I still do think the euro will have a robust bounce sometime soon, but at the same time, I think the long-term prospects for the US dollar are pretty bullish.
Pierre relates: When a strong trend like this appears it is like a river that is flooding. If you would like to go in the opposite direction it will be impossible to take your boat and go against the current. You have to wait until the rains stop and the river recedes before you can paddle upstream.
I would advise waiting for any trade on this pair until a more apparent bottom has formed. Then there may appear a reasonable place for a stop loss. Until this happens I am on the sidelines.
I have found that my best trade is not to trade at all, until the trade comes to me.
There is one specific question that asks if I think we will see $1.44 today before the upthrust.
Currently $1.44 is over 300 pips away. So this will not happen in one day. However, it is possible that the price could reach that far in the next few sessions before the bottom forms.
The number one rule in trading is that no one can accurately predict the market. What profitable traders learn is to determine how and where to limit risk for better potential.
Introduction
Peak Dollar likely occurred Friday August 15, 2008.
As the US Dollar falls lower, the recently purchased consumer, bank, and housing stocks and the USD/JPY will fall.
As the Bank Investment Rally and Dollar Rally ends the emerging markets, the BRICS, and the EUR/JPY will rise.
Multiple systemic risk event potentialities exist as does the likelihood of a war with Iran over its nuclear ambitions.
A wealth preservation strategy is developed below.
Ongoing stock charts show Monday August 11, 2008 to be 'a type of Peak Wealth'
This week saw investment desire peak on Monday August 11, 2008 due to increased risk aversion to debt at banks and investment bankers
The ongoing Yahoo Finance five day chart of the financials, IYF, compared to the the consumer discretionary stocks, VCR, and the S&P ... IYF, VCR S&P
The ongoing real-time Yahoo Finance 5 day chart of the Russell 2000 ... Yahoo Finance Russell 2000
The ongoing real-time MSN 5 day chart of the Russell 2000 ... MSN Russell 2000
The ongoing real time Yahoo Finance 5 day chart of the S&P, the Nasdaq and the Russell 2000
The ongoing real time Yahoo Finance chart of the Banks, KBE ... KBE
The doji in the parabolic rise in the chart of the US stocks relative to the world stocks, VTI:VEU, suggests that the Dollar Rally is over.
Weekly charts Show The Stock Market To Be Trading On "Thin Ice" -- Ice So Thin It Can Give Way Any Day Sending The Markets Lower
Russell 2000 Value, IWN, being comprised of US based companies highly dependent upon and reflective of the financial sector, rose strongly. It has been ground zero for the Financial and Rising US Dollar Rally.
The weekly chart of the Russell 2000, IWM shows the effect of five weeks of the the US Bank Salvation and US Dollar Rally.
The daily chart of the Russell 2000, IWM, shows a bearish harami, and rising price on falling volume, suggesting that a change is at hand.
The Nasdaq, QQQQ, rose to 50 day moving average.
The overall stock market, VTI shows a positive doji.
The financial sector, IYF shows a negative doji.
Home building stock, ITB, shows a questioning doji, on falling volume. The daily chart of XHB, shows a rise to 200 day moving average.
The S&P 500 Large Caps, $SPX, shows rising price on falling volume in a wedge that has reached strong resistance at $1300; this relates rising aversion to stock investing; the rising dollar having no place to put its gains, will now fall.
Home Depot, HD shows a rise to 50 day moving average.
Autozone, AZO shows a long legged doji at an all time high.
Health care REITS, HCN, has rallied as part of the Dollar Rally; its rising price on falling volume, and its bearish harami suggests the end of the stock rally and this is likely to pull the US Dollar down.
In contrast with the US Stock market which has been rallying, the world stock markets, EFA, have seen increasing disinvestment as the world currencies have fallen.
The weekly chart of the US Stock markets relative to the world stock markets, VTI:VEU Weekly, shows the power of the Dollar Rally and suggests a correction is coming.
It's uncanny: First Solar serves as the canary in the stock market coal mine it always pops or drops at market turns. FSLR. Look how it turned right before the end of the TAF rally on May 19, 2008; then it turned lower on June 23, 2008, as the yen carry traders sold out of the BRICS, EEB:VTI, and now it's gravestone doji, relates the current rally is done and over.
The chart of EEB:VTI tends to confirm, with today, a likely Elliott 2 wave down, ready for a little rise to an Elliott wave 3 up.
Note the bear cross on June 23, 2008; this was when disinvestment really picked up steam as the minutes of the May 19, 2008 Bank of Japan got fully read and understood that rising inflation is an investment risk concern.
Note also, the bearish engulfing on July 24, 2008, in the chart of EEB: this was 'Peak Currencies' and then on August 7, 2008, an Elliott Wave 3 of 3 Down began in the EUR/JPY.
The US Dollar rose strongly trading today ... Today, August 15, 2008 was likely 'Peak Dollar'
The ongoing real-time INO real-time chart of the US $ Index.
The ongoing real-time twenty four hour Kitco.com chart of the US Dollar, $USD.
The ongoing real-time Yahoo Finance 5 day chart of UUP shows a close at 23.92. UUP
The ongoing real-time FXStreet.com hourly chart of the USD/JPY.
Stockcharts.com shows the US Dollar closed on August 15, 2008 at $77.15. $USD Weekly $USD Daily
The US Dollar certainly closed the week out strongly; but the overall stock market has been unable to benefit from its strength due to rising risk aversion.
The liquidity only flowed in a limited number of consumer sectors such as housing, XHB, and consumer discretionary, XLY, the Russell 2000 shares, IWM.
Of note the daily Russell 2000, IWM, manifested a bearish harami, at the top of an ascending wedge. And the weekly Russell 2000, IWM, settled in almost a grave stone doji.
Now that options has expired, the yen carry traders will be taking profits next week on the stocks they drove up; and this will be a factor drawing down the US Dollar.
the housing such as Pulte Homes, PHM,
the value stocks such as Blackrock, BLK,
the financial stocks such as Nicholas Financial, NICK,
the consumer stocks such as Carnival Cruise Line, CCL and McDonalds, MCD.
the retail stocks such Home Depot, HD, New York And Company, NWY, and Childrens Place, PLCE.
I believe that the yen carry traders will be taking profits next week, that is beginning on Monday August 18, 2008, on the USD/JPY which has risen into a wedge to trade at 110.53 as seen in of chart courtesy of ActionForex.com.
Wedges, being inverted head and shoulder patterns, always break down; and the time is "ripe" for the USD/JPY to do so.
Great financial reward is coming to those who have shorted the USD/JPY.
As the US Dollar rose on Friday, gold went through the floor and silver went all the way, through the floor to the basement.
Gold, $GOLD, took a massive hit: it fell to $787.
The gold ETF, GLD, fell to 77.57
Silver ... it is called "Manic silver" and for good reason. It gets excited on market upturns and depressed on market downturns. Silver, SLV, got spiked down; that is like in volley ball spiked down. The spiking down can be seen in the chart of gold relative to silver: GLD:SLV weekly: gold became more greatly valued than silver today.
Silver, SLV, got pushed down so hard that it fell to the level below the October 8, 2007, Citigroup CDO Bust.
The years running yen carry trade came to an end on July 24, 2008: It's termination is seen in the chart of the BRICs relative to the US Stocks, EEB:VTI
EEB:VTI shows the end of the TAF rally came on May 19, 2008 on the very day the Bank of Japan met to discuss its interest rate policy. EEB:VTI
Risk aversion arose and disinvestment came out of the BRICS as yen carry traders became increasingly concerned about rising inflation. And then in June even more so as the minutes of the minutes were released and carried by CEP News and others on currency trading sites such as ActionForex.com where inflation was presented as a rising risk factor.
Nevertheless the Bank of Japan decided to keep its rate at 0.5%; the reason being it is to their advantage to keep the forex lending window (that has been so profitable to the banking elite) going.
Then came a sell off of oil by the yen carry traders on July 14, 2008 to take profits. This produced a bust of the natural resource stocks such as the energy producers, XLE, and the energy service companies, OIH, the metal manufacturing companies, XME, and the gold producers, that is the HUI indexed precious metal mining shares, GDX.
And this started a Financial and US Dollar Rally where the consumer stocks such as the banks, KBE, the consumer discretionary, VCR and XLY, retail, RTH and XRT, and the homebuilding stocks, XHB, rose.
For a change, the United States became a destination for interest rate differential investing beginning on July 14, 2008!
Then on July 24, 2008, the yen carry trade unwound, and then on July 25, 2008 Peak Currencies occurred, really picked up the pace of the unwinding of interest rate differential investing in the BRICS, especially in the commodity currencies, such as the Euro, FXE, the Australian Dollar, FXA, and the Canadian Dollar; and further enforced bearish disinvestment from the commodity shares listed above.
This sea change of an unwinding of the yen carry trade has rewarded those long with EEV and FXP.
The chart of EEV which is 200% inverse of the emerging markets rose beginning May 19, 2008, and then rose again on July 25, 2008. EEV
The chart of FXP which is 200% inverse of China boomed as Peak Currencies disinvested carry trades out of China as the US Dollar Rally took off. FXP
Now with the ending of the 'Dollar Rally', the BRICS and the EUR/JPY will rise
As the US Dollar, $USD, rally ends, the world currencies, specifically the commodity currencies will rise.
The Euro, FXE, the Australian Dollar, FXA, the Canadian Dollar, FXC, will rise together with the EUR/JPY, FXE:FXY daily, FXE:FXY weekly, which is the barometer of the yen carry trade.
The chart of the EUR/JPY -- FXE:FXY, shows that it has fallen to a temporary level of support.
Thus we will see a temporary decrease in the bear market ETFs EEV and FXP; they have risen 47% and 42% since May 19, 2008 when the TAF rally ended.
We will be witnessing a 'death spiral' of the world currencies and the US Dollar all falling lower into the Abyss together.
An ETF investment strategy
The EUR/USD finished the week making more than 50% retracement; Yes, in one month it has reclaimed 50% of the range it took 11 months to build, therefore the Euro, will now take a bounce higher.
The Euro will be rising. The EUR/JPY, FXE:FXY, will be increasing.
Increasing EUR/JPY Investment Strategy
One should now go long the emerging markets by going short their bear market ETFs
1) go short EEV ... EEV ... go short from 91.15
2) go short FXP ... FXP go short from 90.11
Here is the chart of EEV weekly: haven risen to a nearly an all time high, with rising price on falling volume, it's time to take take some profit here.
The US Dollar, $USD, and UUP, will be falling. The USD/JPY will be decreasing.
Decreasing USD/JPY and Decreasing Dollar Investment Strategy
One should now go long:
1) go long DGP ... DGP which is 200% gold
2) go long SKF SKF which is 200% inverse of the financial sector
One should now go short the US housing sector
1) go short on XHB which is the housing sector as it has been at the forefront of the dollar driven financial and consumer stock rally since July 14, 2008.
Gold relative to currencies -- gold in terms of currencies
Gold in terms of the Euro, GLD:FXE, has fallen to the December 2007 level.
Gold in terms of the Yen, GLD:FXY, has as well.
Peak Dollar means the world currencies, especially the commodity currencies will now rise
The Canadian Dollar, FXC, got knocked down to last September's value.
It was three black crows for the Australian Dollar, FXA.
The Japanese Yen, FXY: it via the Bank of Japan 0.5% lending window has been the 'fulcrum of wealth', that is the center piece of interest rate differential investing.
The Euro, FXE, fell to support at 146.96.
The British Pound, FXB, once the world's governing currency, got severely hit: it's now the "dog" of currencies. Strong kings and monarchs have ruled Britain, could a "strong sovereign" rise again in Britain? ... Only time will tell.
US Treasury Bond analysis
The Dollar Rally was so strong that it took the US Government Bond ETF, TLT, higher -- it should have been going lower during the rally.
I am convinced that a run on the US Treasury bonds is underway: The topping out on March 18, 2008, of TLT came as the bond marketplace declared a defacto interest rate hike in response to as the Fed's provision of TAF, TSLF and PDCF facilities.
The interest rate on the 30 year US Treasury Bond, $TYX, has been going down for the last three weeks of the US Dollar rally.
I expect interest rates to generally continue rising, and far, yes far above, what most analysts think. Yes interest rates will be rising ... the TIP bonds, TIP, have been falling with the utility stocks, VPU, as investors sell, based on fears of rising inflation.
Natural resource stock investing became a relic of the bygone era of fiat wealth on July 14, 2008
The yen carry traders sold oil, USO, on July 14, 2008 to take profit, just days before option expiration. This caused a sell off in the natural resource sector; and the metal manufacturing stocks, XME, saw severe disinvestment, as the commodity currencies were sold off as the currency traders shorted the EUR/JPY.
A wealth preservation investment strategy given that Peak Currencies and Peak Dollar have passed
Now with the dollar surge ending, and all currencies having sunk, an epic investment sea change is going to occur.
Peak Dollar means that the neoliberal floating currency exchange regime "has met its Waterloo", as a rally can only go on so far in the face of the onerous level two and level three assets at America's banks and investment banks, as well as rising inflation, and ongoing economic deterioration.
Gold is going to arise as the defacto international currency.
A rising ratio of gold relative to the international currencies, GLD:DBV, from 2.8 and going higher, will be clear cogent and convincing evidence that the neoliberal, floating currency exchange policies of Milton Friedman G-7 group, have failed ... GLD:DBV
Furthermore multiple systemic risk events and the soon coming war with Iran over its nuclear ambitions are reasons for investing in gold.
The investment demand for gold is seen in the following ratios:
GLD:VTI rising from 1.2
GLD:VEU rising from 1.6
GLD:RJI rising from 6.5
GLD:USO rising from 0.80
A sound wealth preservation investment strategy has two components.
First, I recommend a two-thirds investment in GoldMoney.com and BullionVault.com to protect one's wealth from multiple systemic risk event potentialities, which could occur at any time, and the financial dislocations that will come from a war in Iran over its nuclear ambitions.
Second, I recommend that one have a one-third investment in a trust account with investment in the section 'An ETF Investment Strategy' above.
As Herb Greenburg of Marketwatch relates, in article 'How To Keep Your Investments Safe', all ETFs should be in a trust account and NOT, repeat NOT, in a brokerage account.
Caveat: I am a blogger who writes about my convictions of gold as an investment. I do not receive or expect any compensation for the things I write. One should always consult a licensed investment professional before making any investment decisions.
For those who do not like using ETFs for short selling, I provide a a list of 100 individual stocks
Here is the Resourceful Bear list of stocks which represent excellent short selling opportunities that have risen with with US Dollar driven rally.
The investment professionals see things differently than I do; they are all, yes all very bearish on gold; and I am not; I recommend an investment in gold.
Corey Rosenbloom shares: Gold could come in as low as the $650 to $700 range ... as seen in this chart of gold.
Mike Sheldon relates: What's happening with gold should be no real surprise. Although I have stated many times that gold is money and gold should do well in deflation, and we are in deflation ... in the initial stages of deflation, leverage in everything is reduced by force. The Euro, Chart of the EURO, has broken the weekly trendline, but barely. Unless it reasserts itself, a drop to the 200 day Exponential Moving Average (EMA) near 137 might reasonably be expected. There is also support at that level from the last major breakout.
ActionForex relates: The EUR/JPY is set to take on the multi year channel support again. Spot gold looks set to take out 772 medium term support level and dive further into 600s region. Such developments will be important to solidify the current trend, i.e., unwinding of carry trades and flow of fund into dollar assets.
Tim Knight relates: I was premature to say the EUR would strengthen short-term. The fast and furious drop beneath the red line you see below simply continued. Congratulations to those short the euro! I drew a new retracement pattern this morning, and it seems to me this could keep falling until around the 1.44 level. I still do think the euro will have a robust bounce sometime soon, but at the same time, I think the long-term prospects for the US dollar are pretty bullish.
Pierre relates: When a strong trend like this appears it is like a river that is flooding. If you would like to go in the opposite direction it will be impossible to take your boat and go against the current. You have to wait until the rains stop and the river recedes before you can paddle upstream.
I would advise waiting for any trade on this pair until a more apparent bottom has formed. Then there may appear a reasonable place for a stop loss. Until this happens I am on the sidelines.
I have found that my best trade is not to trade at all, until the trade comes to me.
There is one specific question that asks if I think we will see $1.44 today before the upthrust.
Currently $1.44 is over 300 pips away. So this will not happen in one day. However, it is possible that the price could reach that far in the next few sessions before the bottom forms.
The number one rule in trading is that no one can accurately predict the market. What profitable traders learn is to determine how and where to limit risk for better potential.
WIDGETIZE