This is an excerpt from an article I originally published on Seeking Alpha on October 30, 2011. Click here to read the entire piece.)
The U.S. dollar was one of last week’s biggest losers during a very bullish week. As I have chronicled for several weeks now, the market’s bullish signals continue to grow. With bullishness on the rise and volatility on the decline (as measured through the VIX), reasons to stay long the dollar have apparently decreased. After Europe’s big announcements on resolving eurozone sovereign debt problems, the dollar index dropped about 1.5% to crack its 200-day moving average (DMA) for the first time in almost 2 months. This drop resoundingly ended the relief rally that I anticipated after the S&P downgrade of U.S. debt and which finally began with a jump over the 200DMA in early September.
Source: stockcharts.com
The 200DMA continues to serve as a critical dividing line between a bullish and a bearish dollar. {snip}
Japan’s latest intervention to weaken the yen provides an opportune moment to close out my last dollar bullish positions. At the time of writing, the intervention is artificially driving the dollar up against all currencies presumably because the Japanese are selling yen against dollar purchases. {snip}…
My growing bearishness on the dollar makes me ever more bullish toward gold. This latest bout of currency intervention is a bonus reminder of the on-going competitive devaluations occurring across the globe that leave gold standing on high as a currency that cannot be created out of thin air and a currency much less vulnerable to manipulation for economic advantage.
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Source: stockcharts.com
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Source: FreeStockCharts.com
{snip} Silver is bumping up directly against double resistance at the 50 and 200DMA. {snip}
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…be careful out there!
This is an excerpt from an article I originally published on Seeking Alpha. Click here to read the entire piece.)
Full disclosure: net long the U.S. dollar, net short the Japanese yen; long GG, GLD, PAAS, and SLV