Friday December 2, 2005 - 11:42:00 GMT
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Black Swan Capital - www.blackswantrading.com
Nikkei-$: The trend is your friend!
“What feels good or is psychologically appealing is not necessarily profitable.”
You remember the old saying? As the Nikkei goes, so goes the dollar! Actually, I just created that—it’s my new saying. It became my new saying because I found it to be true on the weekly chart, as you can see below.
The Nikkei put in a top (intermediate-term) in April 200; the dollar top was Jan 2002. The Nikkei bottomed in April 2003, while the dollar bottomed in Dec 2004. That’s darn close to a 100% predictability rating based on my selected sample size of two events. (I didn’t stretch the chart back more because my 100% accuracy expectation might have been jeopardized. It’s so easy to fit the facts to one’s story when you really try.)
But seriously, if it’s possible to take this stuff seriously, there might be some dynamic at play here—and if it is, it might suggests the dollar continues higher from here. We think that to be the case. We’re just having a bit of trouble defining exactly what that dynamic might be.
Oh, we have plenty of “reasons,” most have already been well verbalized by those riding the Nikkei-$ trend. But, we haven’t much original content to add the “body of evidence” at this time. We’re working on it.
For now, the trend is your friend. But then again, US Non-farm Payrolls are due out at 8:30 a.m. EST this morning; many have lost friends in the past during these times. Be careful out there.
Black Swan Capital
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