This One Market Is Gearing Up For A Major Breakout

  • August 12, 2005
  • Jes Black


FX: Following a Fibonacci 13 day
selloff, the dollar index has met our target level of 87.00 ahead of the Trade
deficit data due in 10 minutes. We will look to buy USDX if it can sustain a
move above downtrend resistance crossing at 87.00 in the coming hours.
Otherwise, a move below channel support crossing around 86.80 would deal a
significant blow and lead to sustained selling pressure over the coming weeks.

 

*Meanwhile,
it appears gold is gearing up for a major breakout against all major currencies
– report to follow.

 

 


Stocks:  The whipsaw action this
week has been incredible but our view is unchanged. We feel the stock market
topped last week and traders have a good risk/reward setup to get short the
rallies with risk limited to just above the 1245 highs. Meanwhile, we are quite
content with our call to go long the VIX last month at 10.50 as prices have
fallen back to 12.50, but still giving us ample protection.

 


Bonds: No change: Bond yields rose
above 4.4% but only a move above 4.6% in the 10-year yield would indicate bonds
are headed lower. Meanwhile the 5-year note is getting pounded by the
speculators and remains the best bond short out there as the market prices in
more Fed hikes to come this year and the next.

 

Regards,

 

Jes Black

 

FX Money
Trends

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Hoboken, NJ 07030

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