Do you remember them? Of course you do. There was/is a whole cult with a central precept that the US dollar is doomed, as if other garbage currencies were any better. People need to understand this is a casino. Prices do all kinds of things in defiance of what people think they should do.
Is this just the rant of some crank blogger or is the buttoned down, oh so respectable US Federal Reserve not trying to stimulate casino mentality (which it is pretending to want to tamp down at this moment)?
I like almost nothing about this market other than the opportunity it is going to present when the distortions start to get shaken out and things become a little more linear or readily understandable. But it is no surprise whatsoever that the USD is rising. In fact, in my best scenario it should rise.
I will be the first to admit that beyond the rising dollar – which makes sense as it is the world’s reserve currency, with claims to it wired in – there are a lot of messed up signals. A version of the above US dollar chart was put in NFTRH 230 nearly 9 weeks ago because it made a bullish signal (EMA 10 crossed over the EMA 35) that has proven reliable in the past. Well what do we know? It was indeed a precursor to a strengthening rally.
Yet in the bottom panel is the gold silver ratio and this touches on the fact that some of my indicators have pretty much stopped working, in the short term at least. The GSR has gone with the USD and broken out but has not yet indicated draining liquidity. The precious metals sector and commodities have predictably gotten croaked by this signal, but not yet the broad stock market.
It’s a tough market and much like with the gold chart shown this morning, we should be aware that anything is possible in the realm of price. Risk should be managed accordingly. I think we are going to get a stock market top in here soon, but this guy running expectations over at the Federal Reserve has done a masterful job of keeping so many seemingly illogical balls in the air all at once.
Hence, cash – for a US player, as represented by the rising USD – remains good until things clear up. Hey look, cash is appreciating.