ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
U.S. Dollar Breakdown In the wake of the Federal Reserve’s last pronouncements on monetary policy, the U.S. dollar index (DXY) sold off and confirmed its latest breakdown below its 200-day moving average (DMA). This latest 200DMA breakdown looks more damaging than other episodes. For example, the U.S. dollar index extended further below its 200DMA than … Read more
Major central banks typically cut interest rates in response to economic stresses; they ease when the data force them to do so. Some important exceptions in recent history happened 1) in 2016 when Mark Carney’s Bank of England cut rates as a cushion against the potential downsides of the pro-Brexit vote, and 2) when the … Read more
AT40 = 20.4% of stocks are trading above their respective 40-day moving averages (DMAs) (ended 13 days in oversold territory)AT200 = 14.9% of stocks are trading above their respective 200DMAsVIX = 21.4Short-term Trading Call: bullish (with caveats all over again) Commentary All oversold periods must end – it is just a matter of how and … Read more
I saw a flicker of hope for home builders in the May Housing Market Review. Traders decided to snuff that flicker out very quickly afterward. When I wrote June’s housing market review and described a “struggling flicker,” the iShares US Home Construction ETF (ITB) was once again bouncing off the bottom of 2018’s trading range. … Read more
AT40 = 3.6% of stocks are trading above their respective 40-day moving averages (DMAs) (oversold day #7, 10-year low!)AT200 = 8.0% of stocks are trading above their respective 200DMAs (9 1/2- year low!)VIX = 36.1 (1-day gain of 20.0%, 10 1/2- month high)Short-term Trading Call: bullish (oh so many caveats below!) Commentary Although it’s been … Read more