King Dollar Creates Bearish Wick at 8-year Resistance!
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From a monthly basis, the U.S. Dollar created another large bearish wick along an 8-year resistance line at (1) in the chart below. This might surprise a few investors as the Dollar is a popular investment choice right now, with 77% of investors bullish the US$. The combo of the wick at resistance and 77% bulls increases the odds that the US$ remains soft for a while (see my Soft US$ post here).
On the flip side, the Yen is down 20% over the past year, driving it down to its Fibonacci 38% retracement level, and sentiment is very low at 22% bulls. The US$ and the S&P 500 have been correlated over the past two years (not the traditional love/hate relationship), while the S&P 500 has been non-correlated to the Yen.
Should the US$ continue soft and the Yen rally, look for the S&P 500 to follow the action of the US$! A soft dollar could benefit Gold, Silver and put a smile on the Miners' faces! (See what they're smiling about here.)
Premium Members are owners EWV (2x short the Nikkei) for over a week now. EWV is up over 22% in 8 days thru last Friday. See why members are short the Nikkei in this you tube video interview with Phil Pearlman, executive editor of StockTwits (see interview here).
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