An Oversold Stock Market With Plenty of Downside Risk – Above the 40 (September 23, 2020)

Stock Market Statistics AT40 = 19.6% of stocks are trading above their respective 40-day moving averages (DMAs) (oversold)AT200 = 36.2% of stocks are trading above their respective 200DMAsVIX = 28.6Short-term Trading Call: cautiously bullish Stock Market Commentary On Monday I switched to a neutral short-term trading call to get mentally ready for a major change … Read more

Bitcoin: A False $12K Breakout Creates the Pause That Refreshes

Trees do not grow to the sky – even cryptocurrency trees with Bitcoin leaves. The old adage describes a core rule of the physics of price momentum. Whether buying or selling, traders and investors eventually exhaust themselves – whether existing resources are too low to maintain buying pressure or motivated sellers finally run out of … Read more

Bitcoin: One More Bet On A Continued U.S. Dollar Breakdown

Bitcoin (BTC/USD) is surging through a long overdue breakout of the $10,000 level.

The U.S. Dollar Index Breaks Down The U.S. dollar broke down last week. The weekly chart below shows the U.S. dollar index (DXY) closed last week at a near 2-year low. Numerous anti-dollar bets are gaining fast thanks to the U.S. dollar’s breakdown. The cryptocurrency Bitcoin (BTC/USD) is joining the party. Bitcoin joins the anti-dollar … Read more

Canadian Dollar: GDP and COVID-19 Advantage over the U.S. Dollar

The Bank of Canada (BoC) released its latest Monetary Policy Report on July 15, 2020. Neither the report nor the press conference contained any surprises. The BoC did not change interest rates, kept the crank turning on its Quantitative Easing (QE) program, and promised to “hold the policy interest rate at the effective lower bound … Read more

Bottoming U.S. Dollar Ends Bargain Shopping in Mexican peso, South African rand

The U.S. dollar index (DXY) continues to pivot around its 200-day moving average (DMA). Last week, the U.S. dollar bounced before retesting the lows from March. The U.S. dollar now looks ready to challenge its 200DMA as resistance; it will likely complete another cycle by rallying at least to the previous highs above the 200DMA. … Read more

The U.S. Dollar Remains Well-Supported Despite A Month of Wild Swings

When the stock market sell-off began in earnest in late February, the U.S. dollar index (DXY) surprisingly plunged along with the major indices. I accepted the narrative explaining that the dollar’s decline came from the euro’s gain as “risk-off” traders rushed to close out euro shorts in carry trades. The swiftness of the risk-off move … Read more

Central Bank Unease: Fed Caps Week of Emergency Actions As Markets Panic

In an earlier post on Sunday, I provided reasons to believe that the market was finally drawing a line in the sand for a sustainable bottom. With anticipation, I pronounced I would go on a shopping spreed down to S&P 500 (SPY) 2600. At the time of writing, it looks like I may have to … Read more

A Viral Cure from the Federal Reserve: An Ambulance Full of Rate Cuts

Fed to the Rescue If you are sitting at home wringing your hands about catching a virus from the outside world, I am guessing you are not exactly relieved to hear that the U.S. Federal Reserve may try to come to your rescue with more rate cuts. Yet, easy money is what central banks know … Read more

Policy Pressures Significantly Weaken the Canadian Dollar

After hitting a 15-month low, the U.S. dollar versus Canadian dollar (USD/CAD) bounced nearly straight up to the top of its range.

For months, I have tried to stay bullish on the Canadian dollar (FXC), particularly against the U.S. dollar (USD/CAD). Bit by bit, the Bank of Canada has undermined my bullish narratives. The tune from the Bank of Canada (BoC) notably changed in the November report on monetary policy, and last month’s report on monetary policy … Read more

Forex Critical: Mexican Peso Hits Key Milestone After USMCA Passage

The U.S. Senate approved the U.S.-Mexico-Canada Agreement (USMCA) trade agreement on Thursday, January 16th. That timing may mark a major milestone and turning point for the Mexican peso against the U.S. dollar (USD/MXN). The following day, USD/MXN sliced through the low of 2019 and hit a 17-month low. I have been bullish on the Mexican … Read more