How long can equities keep selling off? A look at the Dollar might help to answer this question. It is amazing these days to plot the Greenback with the S&P on the same chart. Note the almost perfect inverse correlation of both asset classes recently:
From a technical standpoint, the Dollar is running into strong resistance around 80 (trend lines and 50% Fib retracement), so equities could see some stabilization soon:
However, it doesn’t mean that prices have to reverse at potential resistance areas . The level around 80 is just a potential battle ground between bulls and bears. Beyond that, the Dollar could experience the next major resistance at 83.
Part of the the Dollar’s strength is the Euro’s weakness. The European currency is rapidly approaching major support:
Conclusion: I wouldn’t be surprised if the major part of the declines is behind us. It seems likely to me that the Greenback will resume its way down since this is what the FED is trying to engineer.
Since I’m currently short Euro in the Covestor Model Portfolio, it will soon be time to take profits on the position. Also, I am short US Financials and Basic Materials. I consider both positions “rentals” and will be closing them probably today.
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A young and savvy, yet experienced and accomplished investments mogul since ‘01; Michael has amassed a fortune as a private self investor. Recently starting his own successful blog and turning it in to a corporation — MIV Investments Inc., a company offering advice to thousands of people worldwide and attracting contracts from various reputable sources. His articles and publications have been linked to Forbes, CNN Money, Reuters, Bloomberg, and many other top worldwide mainstream media sources.
Michael Vlaicu
