Chart That I Will be Watching Tonight
The inverse correlation between the US dollar and the US equities has been a bit out of whack for past couple of days. These correlations are not universal and work until they stop working. One must keep an eye out for the fact that this correlation that has existed for such a long time might now be coming to an end.
At the same time, I am not assuming that it has come to an end. I will let the market tell me. I will once again reiterate “Wise is not the one know what is coming. Wise is the one know whats that he CANNOT know what is coming and keeps his mind, eyes and ears open”.
The chart that I will be watching a close eye on tonight is the EUR/USD chart. Euro currency fell in a waterfall fashion all day long only to reverse slightly – it has bounced back up from 1.3900 mark. I expect this bounce to be short lived and the downdraft to resume. Usually the trend of Euro is set for the night soon after the European markets open at 3AM ET.
I am sorry to disappoint you that I don’t have any bold forecasts here. I will however say that I am positioned for a downside move tomorrow (Thursday) and possibly a test of May lows either tomorrow or on Friday. Should we start moving down, I will close 50% of my short positions at Monday’s lows and the remaining 50% at SPX 875-880 region.
