Well, I’m finally crawling out from under my day job and the birth of my second son (Bobby) – and now I’ve got a bit of time to do some posting. Bobby is finally doing better – terrible colic has made life a bit tough for my wife and I – particularly her. But he’s now sleeping on a pretty regular schedule and it’s time to get back to ETF Prophet!
BZB and I have both looking at the same issue from different angles. Looking at his recent post on UUP – I took specific note of this quote…
Now I’ve been looking at the same issue – namely – that the dollar might be reaching the point where we might expect a reversal. I’ve been looking at it from the standpoint of support.
As you can see, we’re near the bottom of the channel. But adding to this is the recent correlation between the VIX and the USD. In the bottom pane, you’ll see an RSI(15) for the USD overlaid with an RSI(15) for the VIX. You can see that the two are moving together. To me, this says two things: (1) that if we see a rise in the USD, we should be on the lookout for a rise in the VIX, and (2) if that happens, we might see a retracement of the S&P 500. Right now, I see no reason to do anything on the short side if only because there is a clear channel that I’m watching on the 120m chart. Take a look at it below.
I’d want to see a break of this to aggressively short – as this uptrend continues, I would look to be long on the bottom of the channel on any retracement. Breaking that channel, and I’ll change my positions. That’s it for my update – I still need to get up the results of my weekly system – but the computer on which I have had all of my systems is currently down for the count so it will take some time. Hope the market is treating everyone well.
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