Do you trade the USDX? If yes, here’s an update on my mini-crash scenario
FX:
Our “September Mini-Crash” scenario is right on
target. As we explained yesterday, “The Fed now risks inverting the yield curve
with another rate hike. This situation is causing traders to unwind long dollar
positions in droves.”
In the chart below note how the wave pattern held
up nearly perfect into a “wave B” high. So now that the dollar is trading below
it channel support, it suggests that USDX is completing “wave 1 of C” down. The
next move should be a correction back to the underside of this channel support
in “wave 2” up followed by the “mini-crash” in “wave 3” down. Only a move above
87.50 would negate this outlook and suggest something else was developing.
Stocks:
No change: In Sunday’s report this weekend we
said to expect a “bounce off of the 1,200 level. As long as this holds we favor
a continued correction for the next couple of weeks followed by a break below
here which will see intensified selling pressure.” So far so good on this
forecast. SP500 hit 1204 and the futures dipped just below 1200 before staging
an impressive rally over the past few days. Key resistance for the bearish
scenario is 1245.
Bonds:
No change: As we have said for the past few
weeks, an expected decline in stocks would likely force more players to go long
bonds, which they are doing now as the 10-year yield pushes back to 4.0%.
Regards,
Jes Black
FX Money Trends
613 4th St Suite 505
Hoboken, NJ 07030
Tel: 646.229.5401
Jes
Black is the fund manager at Black Flag Capital Partners and Chairman of
the firm’s Investment Committee, which oversees research, investment and
trading strategies. You can find out more about Jes at
BlackFlagForex.com.
Prior
to organizing the hedge fund he was hired by MG Financial Group to help
run their flagship news and analysis department,
Forexnews.com. After four
years as a senior currency strategist he went on to found
FxMoneyTrends.com – a research firm catering to professional traders.
Jes
Black’s opinions are often featured in the Wall Street Journal, Barrons,
Financial Times and Reuters. He has also written numerous strategy pieces
for Futures magazine and regularly attends industry conferences to speak
about the currency markets.