basehitz

Has the Dollar Hit a Major Bottom?

I saw 3 Prechter interviews recently. His concepts are intriguing, but I draw my conclusions by other basis.

On my live trading screen, I track charts of USD TBT SPY USO, then a bunch of other tickers and other sub-groups. But those 4 show me that, just like last year, when SPY sells off, traders move into USD and US Treasuries. Commodities then sell off in response to USD strength. Recently, CNBC’s Liesman tried to argue USD inverse to SPY had broken. Bull! Watch it yourself live and it’s obvious.

Some argue it’s a wave model, or technical, or fundamentals. Whatever. What I see is robotic trading to hold the above relationship still intact. I maintain that when the market corrects, commodities will follow as traders seek refuge in USD and UST.

My concern with the market is less about wave theory, and more about overleveraged consumers. Bulls are bringing out the same argument of typical cyclical plays in a consumer driven economy. Trader Mark challenged JPM’s argument today using the old playbook, and dismisses the “new normal”. I disagree with JPM. . . strongly. Consumers have spent too much for too long and now have a mountain of debt with shrunken asset values and weak job prospects. Whether that follows a wave theory, I’ll let someone smarter figure that out.

BTW, Lowe’s just posted results and the forecast. Crappy on all points. It was down 12% premarket. More to follow IMO. Welcome to the “new normal”. Consumers have shot the wad. It will take years to repair the damaged balance sheets.