Uncle Buck is pissed at you

The US dollar is on a counter-trend rally, rampaging against asset market speculators

And for the sake of any further rally (our plan was for Q4-Q1, and we’re sure well into Q1) it had better be a counter-trend rally in USD or the bear market – still intact as it is – will resume.

I am speculating a bit in a couple Goldilocks (i.e. potentially favor, or at least not directly impaired by a stronger dollar) items, but those trades could be broken with more market weakness (broad market rally, haggard though it is, is not broken yet).

Here is USD (DXY) in pre-market. The target we have been planning in NFTRH is the junction of the 38% Fib retrace (106.17) and the 200 day moving average (106.47).

USD has potentially entered a cyclical bear market back in September. But that does not break its “anti” correlation to the world of assets. As a side note, if the Fed’s forced hawking resolves into an outright deflation scare, you just watch how intensely the “death of the dollar!” (DoD) cult eats itself some dollars as it flies out of all the commodities, resources and maybe even precious metals* it is touting.

US dollar index (USD), DXY futures

* I say “maybe” because theoretically, the things (the elements of counter-cyclicality) that would drive USD up are also the things that would see gold relatively stable and very much aid gold mining fundamentals. But most people don’t want to hear that. They want to hear “inflation” and the issue in the gold sector would be in the form of a question; how many inflation bugs are left to sell?”

For “best of breed” top down analysis of all major markets, subscribe to NFTRH Premium, which includes an in-depth weekly market report, detailed market updates and NFTRH+ dynamic updates and chart/trade setup ideas. Subscribe by Credit Card or PayPal using a link on the right sidebar (if using a mobile device you may need to scroll down) or see all options and more info. Keep up to date with actionable public content at NFTRH.com by using the email form on the right sidebar. Follow via Twitter@NFTRHgt.




This Post Has 2 Comments

  1. MikeC

    Gary, posting here, sorry.

    I look at interest rates rising again. And one thing I have not heard much talk of is it costing the government a ton more to borrow money than it did just last year. How does that play into the rise in rates, inflation and the Fed? I understand (I think..) that the Fed and government are supposed to be separate, but at some point there’s got to be a discussion going on?

    “The Treasury Department paid a record $213 billion in interest payments on the national debt in the fourth quarter of last year. That’s up $63 billion from the same period a year earlier.

    It also marks the largest quarterly increase on record, up $30 billion from the third quarter.

    The hike is mainly due to the Federal Reserve raising interest rates.”

  2. Gary

    Don’t they just raise the debt limit from sublime to even more sublime? In a Keynesian system there is no accountability (hello gold). Theoretically they can just keep spending and spending paper bills plucked off the munny tree. Seriously, I don’t know what the limits are. The Fed will, IMO, put on a good show though because if inflation’s effects get too far out of hand the people will abolish them some day. All of this is why I would never consider Treasury bonds as an investment, but do consider them a good tool for analytics and sometimes as trades.

Comments are closed.