July 25, 2007
Checking on the Doomed Dollar
The US Dollar Index recently took out the monthly swing low from 2004 that everyone had his eyes on. Back in September 1992 the Dollar Index went as low as 78.19 (intramonth) … below that level is truly no man’s land. I’ve said it a thousand times and I’ll say it again: Maintain your USD short positions.
Related:
US Dollar Index - Bearish Any Way You Look At It
Slip Sliding Away
Cat: | Time: 8:43 am (utc+8)
July 25th, 2007 at 9:22 am
Your commments on Nasty and Getting Nastier yesterday were perfectly timed, good markets begin in bad times, bad markets begin in good times;
Today was a heavy, heavy tape. Lots of work to come back from this one, bonds will call the tune;
July 25th, 2007 at 11:50 am
I happened to discuss the house price with a friend from Utah . I showed my concern about the real estate booming . He laughed at me . If the us dollar break down the support line (see maoxian’s chart)and the stock market will follow . It’s not a good news for everyone .
July 25th, 2007 at 4:18 pm
Chairman do you like the XHB here? I recall in the past you would step in and buy it at 29. What are your thoughts.
July 25th, 2007 at 4:56 pm
Why everybody is so pessimistic on USD? The driving force underlying dollar’s decline is the structuuring shift in the reserve currency or diversification by central banks and global investors(whatever you call it). Though the trend would still persist for a while, I am seeing a rebound in dollar. Technically, it is more likely to form a head and shoulder bottom at an index level around 70-75 on your chart.
July 25th, 2007 at 5:23 pm
@Will: Yeah, I like it because others loathe it though I did pull my order and bought some “Bancorps” instead (where I had a higher degree of confidence in the numbers).
@Yuan: You may be right, who knows, I just follow the trend and try not to think too much or make guesses about imminent “head and shoulder bottoms.”
July 26th, 2007 at 3:47 am
It’s tough to sit tight in year 2005. Essentially you gave back almost all your gain in 2004. I am just wonder how you managed your stop since 2002. Did you take the partial profit along the way? You can also argue that the down trendline was broken during 2005. What did keep you stay tight?
July 26th, 2007 at 5:44 am
wl: Maoxian doesn’t trade. He just writes about it.
July 26th, 2007 at 7:50 am
@wl: It’s a trend-following system not based on “trendlines” — it’s a tad more sophisticated.
@The Plunger: While it’s true that I haven’t day traded for several years, I’ve made a lot of “trading” decisions (where I live, what I do currently) based on my market observations. I could start trading full-time again whenever I choose.
July 26th, 2007 at 8:29 am
CM:
Thinking about trend following systems…
Do you have a guess where your algorythum
(where is your spell ckr?) ;-)
would reverse?
Is this a stop and reverse methodology?
Is there a filter?
Do you like this in shorter timeframes?
Thanks
Bob
July 26th, 2007 at 9:18 am
the question is why do you follow the trend in the USD but buck it in XHB and Bankcorps? :)
July 26th, 2007 at 9:52 am
@Bob: I can say nothing about it under penalty of castration. Already one nitwit imitator is trying to hawk her blue bar red bar reversal system for the low, low price of $1295 (annually).
@Born2: I wrote a little bit about this “contradiction” in this post. The gist is that deeply undervalued assets almost always looks awful from a trend perspective.
July 26th, 2007 at 10:39 am
yes, i read the post, i still do not agree. not trying to pick an argument just trying to figure out the concept for my own sake.
I am at a stage where i am looking for “depressed” stocks that are starting a new uptrend. They may not be cheap on a fundamental basis but they would have a beaten down chart.
For example, look at IBCP’s weekly chart going back 7 years. In mid 2000’s you can see that the stock was “cheap” and yet starting an uptrend. Meanwhile, it is “cheap” in mid 2007 but it is in a horrible downtrend.
Contrast that with CHTR, DYN, JNPR, etc… again, on a weekly chart going back 7 or more years. You will note that they were “cheap” for years and now are trending up.
My point is that even deeply undervalued assets would be discovered by a traditional trend following system when they start their uptrend. You will definitely not catch the bottom but you will have better odds of longer term price appreciation.
Disclosure, i own and have been accumulating CHTR, DYN and JNPR.
July 26th, 2007 at 11:46 am
I agree with Born2Code that trend beats value plays. But for short USD positions I would take some profit here.
July 26th, 2007 at 11:56 am
Born2: I see where you’re coming from … I suppose one could expect the trend to turn up (in something like IBCP) while the stock is still deeply undervalued, but I’m willing to simply step in and buy now and not worry too much about the charts. Like Buffett recently said about the margin of safety, you can’t really quantify it precisely … a fat person is fat whether he’s 300 lbs. or 325 lbs. When cheap gets cheaper I’ll just buy more assuming I have confidence in my valuation of the business.
July 26th, 2007 at 9:10 pm
piled on, though could be a retracement coming then i’m gonna add more! pk
July 26th, 2007 at 9:59 pm
Wow, maybe I should charge $1295 for my algorithm but I don’t want to be a nitwit!
July 26th, 2007 at 10:21 pm
Tom: Yours doesn’t use red and blue bars, does it? Try asking $795 for it then.
July 27th, 2007 at 8:49 am
If I use pink and purple colors, maybe I can charge $805. :)
August 8th, 2007 at 5:51 pm
[…] Most of us look at the Dollar Index (DXY) closely, but it’s also important to keep an eye on the Trade-Weighted Dollar Index (USTW$). […]
September 20th, 2007 at 5:37 pm
[…] We know that below 78.19 is truly no man’s land in the Dollar Index (DXY). The TD Sequential indicator is sometimes useful for identifying trend exhaustion, so a lot of people keep an eye on it. […]
September 29th, 2007 at 11:40 am
[…] Here’s a look at an intraday chart (15 minute) of the Dollar Index (DXY) as it enters the no man’s land below 78.19. (Does anyone else love looking at the charts drawn on 24-hour markets?) Click to enlarge Cat: […]