You must do the things you think you cannot do.

- Eleanor Roosevelt

Saturday, October 31, 2009

Sometimes You Just Cannot Win

There's nothing I could have done to get three of the same colored gems in a row. Sometimes you just cannot win. Don't stress about it; keep going, keep pushing. Such things are statistically unlikely, meaning, if you managed a god awful score this time, your next try will typically come out better (read up on reversion to the mean).

Yen vs Euro

Yesterday, I posted some charts that I thought might push the dollar either further up, or further down. I had my beliefs (strengthening), but allowed things to come together on their own.

I put a short on the EURUSD pair and a long on the USDJPY pair. The first succeeded, the latter, no. I am trying to figure out what allowed the JPY currency to maintain greater strength than the EUR. It looks like their was an interest rate decision by Japan's central bank yesterday, plus a handful of economic releases. I truly do not know what contributes most to investors' analysis of the economic strength of a currency.

I still think that the USDJPY will hold its recent low and move upward. I'll continue watching the charts for technical entries/exits.

NYSE Bullish Percent Index

I like looking at this index. Once it goes below 70%, there tends to be some type of correction. Before putting any money on a short, I would watch the dollar. The stronger it gets, the weaker the S&P500 gets (at least right now) and vice versa. I'm guessing that if the dollar continues to strengthen after all of the volume in the UUP yesterday (check out the charts below), we will upward resistance in the US Markets.

If that happens, some people will get jitters and move their money out, perhaps into cash or treasuries or something "safe". I don't know how much of a reaction this will all cause (or if we have experienced most of it already), but that is my current mental framework of the market.

Friday, October 30, 2009

The Dollar, October 30, 2009

What is happening to the dollar? Look at that volume, both on the daily and weekly.

Will it rebound? or are we set for further weakness?