Monday April 26, 2010 - 13:12:38 GMT
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Black Swan Capital - www.blackswantrading.com
If our $ call is right, correlations may change big time! Key News
â€˘ Chinaâ€™s crackdown on the real estate market may trigger an estimated 400 billion yuan ($58.6 billion) to flow out of property and into equities, according to the nationâ€™s largest brokerage. (Bloomberg)
â€˘ Brazilian policy makers will take â€śvigorous actionâ€ť against inflation to ensure that Latin Americaâ€™s biggest economy doesnâ€™t overheat, central bank President Henrique Meirelles said. (Bloomberg)
â€˘ Greek bonds tumbled, pushing yields to the highest since at least 1998, on speculation Germany may refuse to guarantee an early release of bailout funds. (Bloomberg)Quotable
â€śSome people see things that are and ask, Why? Some people dream of things that never were and ask, Why not? Some people have to go to work and don't have time for all that.â€ť â€”George Carlin FX Trading â€“ If our $ call is right, correlations may change big time!
Our longer term dollar call for a while now is simply this: The US dollar entered a multi-year bull market after bottoming in March 2008. If that proves correct, it is likely we will witness some major changes in correlations that seemed to be such layups during the US dollar 7-year bear market phase. Many of us just assume the recent past will be projected into the future. But maybe the less recent past is a better guidepost.
Three major asset class correlation changes versus the buck, which we are already starting to see, include stocks, oil, and gold. Yet, we still see traders and analysts relying on the increasingly flimsy excuse of dollar direction to justify a particular move up and down in oil prices (ditto gold, less so for stocks). But, I guess that is to be expected. They likely wouldnâ€™t be invited back to any party by saying: â€śYou know, I have no clue why oil prices went down today.â€ť
We happen to think the 1992-2002 (closing high in July 2001) bull market move in the US dollar index is a good roadmap for the dollar move this time around. Already we have seen a similar pattern of initial rally off the bottom in the dollar index, then a nasty retracement fooling many into believing the initial move was only a bounce in an ongoing bear market; markets have a way of doing things like that. That happened during the last bull move as you can see in the chart below.
The dollar index, the red line, rallied sharply into 1994, then tanked, retracing about 90% of the initial move. Then there was a rocket ride for the next seven years. The implications, if this period is analogous, which at the moment we think is:
1. Dollar rally for many years
2. Stocks rally alongside
3. Oil prices move higher in conjunction
4. Gold falls
[Chart not available in text format.]
Granted, it is unlikely to be this easy; it never is in the real world in real time, only in hindsight land. But, we think a big correlation change is upon us.
Black Swan Capital LLC
www.blackswantrading.com Did you miss it?
Did you miss our warning the first time around?
I sure hope not.
Back in June of 2009 we released a report detailing the reasons the euro would collapse: The Demise of the European Monetary System. So far, everythingâ€™s played out exactly according to our forecast in that report.
But even as bad as things are for the fate of the euro, Iâ€™ve got good news (for YOU) ...
The Eurozone crisis ainâ€™t over yet.
Nope. Thereâ€™s a whole lot telling us the value of the euro has much further to fall. I mean, Eurozone officials are fighting off a nightmare that just wonâ€™t end; but you have the opportunity to profit if you act quickly.
When the euro dropped from $1.50 back in December to $1.35 now, our members made money over a nice chunk of that move. The recent pause is allowing some of the disbelievers to wake up. But accepting that the US dollar is no longer the dog of the currency world must come before everyone elseâ€™s eyes can truly open.
And chances are there are plenty left whoâ€™ve not yet seen the light.
Donâ€™t keep your eyes closed.
Soon enough, everyoneâ€™s going to know the story, everyoneâ€™s going to be on this bandwagon. But if you wait until that point, itâ€™ll be too late. The time is now to learn the story and capitalize on it. (Keep reading to find out how you can get our latest FREE report exposing the lasting troubles for the European Monetary System.)
Start here and start NOW!
We offer an advisory service with exactly the mission described above. Itâ€™s called PositionTrader FX, and it gives a thorough perspective on currencies at a pace manageable for the average investor (with or without any FX experience.)
And right now weâ€™re offering our latest addendum to our June 2008 report. Weâ€™ve titled it:
Key Reasons Why the Euro is Heading to Par or Beyond against the US Dollar
Get it now to be sure you donâ€™t miss out on what will be certain deterioration, if not a total and complete collapse, of the single currency we know now as the euro.
P.S. When the Euro fails itâ€™s sure to bring down the British Pound, zloty, forint and a host of other Eastern European currencies along with it. PositionTrader FX gives exact details on how to jump on these opportunities. We provide our recommended entry prices, profit targets, stop-losses and updates.
Europe is teetering on the edge of a very narrow wall, and if weâ€™re right ... the euro (and its counterparts) is about to come crashing down.
To learn more and see our ironclad guarantee, then read on ...
OR ... choose one of the options below to SUBSCRIBE NOW and get our FREE report immediately ...
Price: $99/month - Credit Card | PayPal
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All the best,
Director of Sales and Marketing
Black Swan Capital [email protected]
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