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Chris Ciovacco
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Chris Ciovacco is the founder and CEO of Ciovacco Capital Management (CCM), an independent money management firm serving individual investors nationwide. The thoroughly researched and backtested CCM Market Model answers these important questions: (1) How much should we allocate to risk assets?,... More
My company:
Ciovacco Capital Management
My blog:
Short Takes - Ciovacco Capital
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  • The Weak Dollar Gives... The Strong Dollar Takes Away

    Comments as of Wednesday's close: Risk assets have been benefiting from a weakening U.S. dollar. On Wednesday, the dollar strengthened on concerns about the economy (acting as a safe haven). From a technical perspective the dollar index has some support near 79.05 and 78.98 (today’s low was 78.33 – we are at 79.53 now). Last time these areas came into play, a three week countertrend rally followed, which is one reason we have been taking relatively small positions in recent weeks. A multi-week dollar counter-trend move is a possibility - we just need to be aware of it.

    Bullish GAPs Still In Play - Support On S&P 500 Holds

    On May 8, 2009, we presented this chart of crude oil (see below). Oil was trading at $58 when we posted the chart. The gap was filled as oil recently traded over $68. Today, similar chart patterns are present in many asset classes. We will illustrate the current situation using SLX (steel stocks).

    Just as the weak U.S. dollar has helped push oil prices higher, commodity related stocks have benefited as well.  From a fundamental perspective, the dollar and U.S. Treasury bonds have become less attractive as “safe havens” as the global economy leaves full blown crisis mode. 

    Click on charts for larger image.

    The charts and comments above are for educational purposes only. 

    Disclosure:  The author and CCM clients own numerous poistions including SLX, USO, and USL.

     

     

    Tags: USO, USL, SLX, UDN, FXA, FXC
    Jun 04 7:26 AM | Link | Comment!
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