The growing conviction on the ‘taper to carry’ plan has helped me hold onto the KRE and IAT Regional Bank ETFs, but they are very over bought on both daily and weekly time frames and there is an FOMC Minutes related jawbone effect coming today. I am going to reluctantly take 7%+ and 5%+ respectively on these ETFs, while the carrying ‘T2C’ plan forward.
The US dollar is in my opinion technically vulnerable per the chart from yesterday’s post, and the FOMC Minutes could play into this because the USD could get hit if the market – and the machines – interpret the Minutes release as dollar negative, and QE positive.
Alternatively, the Minutes could come into play with a dollar bullish interpretation and drive USD up into very over bought territory. But I think the short-term risk vs. reward on the USD is not very good, given the strong post-FOMC rise based on little more than ‘will they or won’t they taper?’ hysteria.
Everything else is situation normal, or abnormal as usual… or new normal. However we might describe it, today is another day trapped in a market thoroughly obsessed with policy makers and if you ask me, dysfunctional and in need of a real clock cleaning.
We’ll watch the VIX, the US dollar everything else once we get through the Minutes.