Fibonacci Financial

Posts Tagged ‘Dollar’

Everyone Loves the Euro ( 93%) right now.

Be a Contrarian and SELL that EuroTrash!

Its Time to BUY American Cash

Here is a great chart from The Elliot Wave Theorist. (One of the high quality services I subscribe to provide Intel for asset allocation decisions in the Fibonacci Financial War Room).

Go ahead be a Nerd and ignore the Herd!

Traders are more  Bullish (93%) on the Euro now than they were at the all time EUR/USD high last year (91% then)!

So What Does the COT Smart Money Say?

The Commitment of Traders (COT) reports out on Friday indicated that the commercials (insiders) are continuing to buy the dollar as it declines here.  Ergo the smart money says the dollar is a great buy here.

The odds are that the US Dollar entered a multi-year bull market last fall according to COT guru at Bullish Review Steve Briese (another valuable source of Intel for the Fibonacci Financial asset allocation model).  And what do you do early in a bull market?  – YOU BUY THE DIPS!

There are a wide variety of ways to participate in this opportunity ranging from the very conservative to the highly speculative.

BUT you need active guidance – Contact Us at Fibonacci Financial.

Do not get the idea that you can trade or make investment decisions from my blog entries.  These are an introduction to my services and do not constitute investment advice.

The inimitable Steve Briese of COT fame not only correctly identified the potential for a massive commodity collapse over a year ago but he is also the only analyst (in my humble opinion)  to have explained what really happened.  He laid it all out in his Barron’s article early last spring.

In his latest Bullish Review he indicates that while a buy signal has not been generated there has been a minor COT buy signal in the NYFE Dollar Index.   The Commercials (Insiders) have been accumulating (buying) dollars on this decline!   LET ME BE CLEAR – I use the Bullish Review as a key tool (Steve is brilliant) for determining asset allocation but neither Steve Briese nor the Bullish Review is responsible for my recommendations. As the dollar approaches the December 2008 low, a low risk buying opportunity will be available.  A stop loss could be placed just below the December 2008 low.

Yes I know that “everyone”  who is “anyone” thinks the dollar is on its last legs, may it RIP. 

And you dear reader thought I was a pessimist.  So, what does a contrarian do?  Look for an opportunity to buy the Buck on the cheap. 

Steve Briese identified the end of a 6 year dollar bear market in September 2008 (great call Steve) and the US Dollar will most likely climb its wall of worry for a couple of years now.  The enormous debt accumulated in dollars constitutes a massive historic short against the dollar.  That massive short position constitutes highly combustible fuel for a buying explosion.  The only fly in the ointment would be if Helicopter Ben’s dollar drop (QE – quantitative easing) and the  O’Bomba Bailouts and Stimulus ignites inflation and another fiat money boom (low risk at this time).  Our portfolios are still on deflation watch.  I am keeping an open mind though.

One of the more conservative ways (as apposed to Forex or Futures)  that I am recommending to my active clients is to buy iPath shares of UUP.

Dear reader DON’T TRY THIS AT HOME, get professional guidance in determining whether this fits into your portfolio and in properly placing an order with appropriate stop loss protection.  Proper money management is a must.

What Are All Those XXXX’s and OOOO’s on the Charts?

( No Dear Reader They Don’t Represent Hugs n Kisses! )

Several readers have indicated that they are not familiar with the point and figure charts that I use for illustration purposes in the blog.  John Murphy (world class technical analyst) provides an excellent overview of Point and Figure charting on his web site StockCharts.com.  If anyone is interested in why I use these “old fashioned” P and F charts drop a comment requesting additional information.

Do not get the idea that you can trade or make investment decisions from my blog entries.  These are an introduction to my services and do not constitute investment advice.

Where Are We In The Markets and What Should We Do?

Current FF Market Model Allocation?

Category 1 – Cash

Gold and Silver are most likely in a long term up trend that started in 2001.  They peaked in 2008 and are currently working their way down and up and down to the first buying opportunity in several years.  Remember nothing goes staight up or down.  Gold should be buy below $700 and silver should be a buy below $7 (very rough guidance).  The pot at the end of this rainbow is a few months away.

PS: This is supported by Long Term precious metal cycles, Long Term trend lines going back to 2001.  The only caveat is the concern as to how they will be affected by the next killer deflationary wave.  This will be monitored as they come back down to their long term trend lines.  Also there is a chance that I will be wrong about deflation coming next.  If inflation is next the price action in the precious metals will show their hand and we will make the appropriate investment response and buy into strength ala Jesse Livermore.

Cash is KING again.  Long live the King.  The U.S. Dollar was in a bear market for several years up till September of 2008.  It is now in a multi-year bull market.  Yes Washington DC and the Fed are doing everything in their power to devalue it BUT the following factors trump their printing press profligacy in the short term anyway.  First and foremost the massive debt accumulation over the last few years is serving as a massive short squeeze against the dollar.  This now turns into a panic for dollars.  Also, in a fractional reserve fiat money system as debt collapses, a reverse leverage works and money supply in the broad sense implodes far faster than the boyz at the fed and treasury can print it.  Add to that the dollar got way over devalued against other fiat (rag money) currencies such as the euro.

PS: This is supported by Commitment of Trader COT activity, Cycle Studies, Elliot Wave action and Point and Figure chart action.

Yes then there is the Euro.  It was in a bull market for several years and got so overvalued that even famous runway models became financial geniuses.  Now it is just Euro trash for a couple of years – if it survives.  Currency unions are notoriously short lived.  Yes I can hear all of you One World conspiracy theorists howling at the moon!  FYI I have read Tragedy and Hope by Caroll Quigley (heavily annotated)and much more.  Please read The Great Wave by David Hacket Fischer for starters and then lets chat.  If the Great Wave does not get the One Worlders the Singularity will!

Category 2 – Lending (Debt Instruments)

To be continued tomorrow.   Yes dear reader for next few days I will cover a category a day.

Since we are midstream in so many markets, it seemed like a good time to start filling out the FF Market Map.

Stay tuned for more.   And remember most of the time it is best to be patient and let the market provide its bounties in its own time.  Get in a rush and you loose….

As always, if you have questions about Category 1 Cash – please drop me a comment and I will address it manana!

This is My Evolving  – Market Decision Dashboard©

(it is at the graphic artists and won’t be ready for a week)

The complete version is a Cube with Risk Levels across the top and Client Profile down the right hand side.  You will be able to click on each underlined item and drill down to specific information.

Click to enlarge

This is a Map of the Markets laid into Quadrants for Asset Allocation purposes.

Please Post Comments – Is it self explanatory OR is it confusing OR do you have questions ???