Loading ...Day Traders beware! Today feels just like Monday, everyone is bearish! But again, the dollar is gaining strength and stability is maintained. Day traders without conviction are getting eaten alive on both directions. Majority of the move have been prior to the opening of the market. So if a day trader shorted on Monday, a day the market was beaten down, he most likely lost money. If the trader purchased on Tuesday, a day the market was up, he lost or barely made money.
The real story however is still King dollar. It is so important for traders and investors to understand how the dollar affects EVERYTHING. We are still in a bear market cycle, just watch the dollar if you need evidence. Every time the US dollar gains strength, equities (the stock market) sells off. When the dollar loses, equities increase in value.
Alphas Edge stock market recommendation and prediction made on Monday still holds, “Here is what you should hope to happen in the next 6 months; dollar strengthens back up to the mid 90s level, stock market drops to retest the lows, interest rates drop as investors seek safety of the US T Bill, and commodities drop in price by 20 to 40%. Our advice is not to fight this necessary correction, sell your emerging markets as I did and invest in the dollar. Hopefully, the Goldman Sachs bankers are smart enough to do the right thing for the US and the world.
I am personally glad that I sold off my emerging markets on Monday and purchased Dollars. With all the talk going on about UBS, (the thousands of millionaires/billionaires having to pay back taxes from offshore accounts), I have a feeling the demand for dollar the next few weeks will go up dramatically. If the dollar is heading higher, than you can almost assume with certainty that the stock market is going lower.
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