Wednesday, August 10, 2011

Dollar Index Says Market is in Trouble

Unless you are Ron Paul, you know that Dollar is not collapsing and has been in bottoming formation since May 2. That was the day stock markets around the world and all commodities hit the top. Coincidence? Hardly. If you are a trader, you have tuned out all the noise from TV and looked at the chart. It says that Dollar Index is about to break out to the upside and do some serious damage to the risk assets around the world. Haven't we already had a 20% decline from the top? You ain't seen nothing yet. With every day DXY does not take out its lows you have to get more concerned. If S&P US debt rating downgrade and FED telling us that funds rate will stay at 0% for 2 years did not send the dollar to the dumpster, you have to think what will. Can you folks imagine where the dollar would be had it not been grounded by the weight of these two events? Dollar is the ultimate safety hedge against systemic risk, well, I guess second after gold now :)

Stay on top of DXY chart and be ready for a breakout. Should it happen all risk will be sold hard. Just look at daily chart from August of 2008 and plot it over all risk assets. But that breakout has to happen first.

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