tag:blogger.com,1999:blog-4878316162397365683.post3727825399882058152..comments2023-11-06T06:01:49.605-05:00Comments on Principle Analysis: an Elliott Wave Blog for Forex Signals, Futures Signals and Stock Signals: Dollar Surges Higher; Stocks Remain Flat, DirectionlessUnknownnoreply@blogger.comBlogger4125tag:blogger.com,1999:blog-4878316162397365683.post-4516587210320709252009-12-16T12:09:47.399-05:002009-12-16T12:09:47.399-05:00Hi Rob, there are lots of possiblities as to why t...Hi Rob, there are lots of possiblities as to why this action is occuring, and I by no means think I know for sure. I think one of the reasons the dollar rallies lately aren't translating well into equity weakness is what you said in your second comment about unwinding the carry trades and short covering; also, major market tops and reversals of trend often don't occur with all markets reversing in unison. Oftentimes one market will top and reverse, then another, then another, while other markets rally. Eventually they all pick up speed and reverse. This is what's occuring now, and the dollar is no exception. <br /><br />My theory is that people want a bull market and bubble somewhere to get that big quick cash. So when a market starts lagging or not performing well, then they rotate to another market. We saw this when the XLF (financials ETF) and the Russell 2000 small caps topped and the Dow and S&P and Nasdaq rallied to new highs. It looked like a shifting of money from the high risk trade to the more conservative trade. Then gold spiked as people were betting on a gold bubble. But now that reversed and the dollar has bottomed. So money is leaving commodities and moving to the blue chips in the S&P and Dow while the dollar destroys commodity values with its rally. Eventually the stronger dollar will hit all asset prices, but it hasn't reached that critical level yet, probably due to what you said in your second comment. This shift in money is what's holding the market up, but eventually there will no where to hide their money and all the markets will give way. The dollar rally will be the biggest challenge for this market rally and will ultimately win and force stock prices down.<br /><br />So once the rotation of funds, looking for the next big bubble and fat gains, is over, the overall market should top. The bulls are running out of room to hide, and the stronger dollar is really pinning them in a corner now. The pressure of a stronger dollar will eventually bring down the whole house of cards. But the bulls are giving it everything they have to keep things afloat and fool the public and themselves that they're actually in a bull market.<br /><br />Just my thoughts. I welcome any further comments from you as well.<br /><br />ToddToddhttps://www.blogger.com/profile/13808483934573587351noreply@blogger.comtag:blogger.com,1999:blog-4878316162397365683.post-32896743002978641882009-12-16T11:57:18.561-05:002009-12-16T11:57:18.561-05:00JD, I'm not entirely clear on what you're ...JD, I'm not entirely clear on what you're asking, but if you're asking if there's a parallel between the market action now and what led to the March 2009 bottom then the answer is yes. The churning sideways action from October 14, 2008 to February 9, 2009 is quite similar to what we're seeing right now in the market. And after February 9th, the market broke out for one final new low before going on the insane rally we are in now. I am thinking similar action will occur now, only inverse of course. I think we will probably break out of this consolidation action soon and rally hard toward 1200 (S&P), then we'll top and reverse sharply. This is not required of course; and we can crash at any time. But this is just my best guess.<br /><br />Hope that helps. If not feel free to email me charts and stuff to help me better understand your question.<br /><br />ToddToddhttps://www.blogger.com/profile/13808483934573587351noreply@blogger.comtag:blogger.com,1999:blog-4878316162397365683.post-88521586363401301312009-12-16T02:25:13.956-05:002009-12-16T02:25:13.956-05:00Hi Todd,
Do you have a theory on the seeming asy...Hi Todd, <br /><br />Do you have a theory on the seeming asymmetry of the dollar/equities relationship? Until recently, every dump of the dollar was accompanied by a big spike up in equities. But since the dollar started rallying, equities have barely fallen; now it seems to take a big spike up in the dollar just to keep equities flat, and stocks melt up again with the slightest dollar retrace.<br /><br />I can think of two possible explanations. One would be that equities have had so much upward momentum that it's been a lot easier to push them up than down. The problem with that idea is the momentum shouldn't be so powerful anymore after the stock market being relatively flat for the past few months. <br /><br />My other theory is that the dollar carry trade still has to unwind more in order to "trickle down" to equities; dollar shorts may not yet be covering on a large enough scale that they have to sell equity holdings to raise the funds for their dollar short covering.<br /><br />Would be very interested to hear your thoughts. Thanks again for your excellent posts, I always look forward to reading them.Robnoreply@blogger.comtag:blogger.com,1999:blog-4878316162397365683.post-21792569371819568562009-12-15T13:05:24.781-05:002009-12-15T13:05:24.781-05:00Todd
Is there anything "fractal like" i...Todd<br /><br />Is there anything "fractal like" in the wanimg momentum of the March to present rally in S&P as seen in last evenings chart?<br /><br />It appears the market moved to lesser degrees above trend, ever smaller deviations from trend, and then dropped below trend and is still making smaller deviations. <br /><br />Until perhaps it just drops completely away from trend, ie a wave 3 of higher degree?<br /><br />I don't recall seeing fractals expressed this way though it may all be part and parcel of the waves we've seen in this wave 2.JDnoreply@blogger.com