As we were just winding down the end of January and have validated our market call on the USD's range levels, the market place have experienced a not so welcoming sight for major equities declining a total of more than triple figures for the week ending Feb 2, 2018.
And the market's reaction started off with Bonds, US Treasury yields nearing the 3% mark (1st signal), followed by tech and healthcare stocks other than the wide factored in rate hike by the Federal Reserve have contributed much to the decline as the market shift more towards inflationary pressures, in spite of the resounding jobs figure previously reported.
As of MegaTrade101's focus on the USD index as our primary indicator, for as long as we have derived and have conclusively deliberated on the market's next probable move we would be in a better footing with the market's overall price volatility between equities and the foreign exchange market. Majority of funds denominated in USD are in the market place with foreign denominations in the European markets are separately allocated.
Moreover, the current market conditions have required a much thorough balance in equities and foreign currency trading funds allocation. The delicate balance of portfolio management has come to a point where upon driven by the 2nd signal of the USD marking our objective levels ahead of the time schedule anticipated.
Nothing really new, as noticed in today's trading activities it takes rather a shorter term period in achieving target levels in equity markets. But it takes more than the normal period to attain such objectives in the foreign currency market unlike those days when global connectivity and high frequency trading has not so much dominated the markets.
Take note: That CABLE has its own idiosyncrasy which has to complete its CAPM or what we term as 'Cyclical Adjusted Price Movement' against the USD index before it makes its final turn from where it originally came from.
ReplyDeleteIt is also called by others as their own version as a Cyclical Variation in Time Series Analysis, Financial Management.
ReplyDeleteAs for MegaTrade101, we have developed our own version as a Cyclically Adjusted Price Action Movement based from CABLE's own idiosyncrasy and market behavior with time series analysis. And an equation derived from CABLE's correlation with the USD Index.
The previous highs on the European majors indeed met their respective line of defense as profit taking activity takes place with the USD DXY moving back higher towards the recent 90.05 high. The degree of the USD recovery may take place earlier than would be expected. But still would not discount a session pullback as market volatility remains.
ReplyDeleteDue Diligence Question:
ReplyDeleteWhen did the USD and Equities last moved in tandem? During 'Exceptional Times' markets tend to move contrary to what is found in textbook analysis.
@MegaTrade101 No mater how you slice & dice it...it's still a #MARKET #SELLOFF. A TUG of WAR between Bulls / Bears for #POSITION ADJUSTMENT is at hand. Who blinks first losses. Its a major SHAKE-OUT well within a #REINFORCED #TREND 9 years in the making!
ReplyDeleteOn the other hand, as the mirror image of USD & the EURO has a 'New Price Cycle' with New Highs & Lows within an overlapping month's trading; accompanied by a sudden change in trend direction where a market sell off occurred is anticipated. Currently above the 90.05 levels, its important to see the closing price of the DXY to remain better at these levels to see a more convincing leg in the making.
Thus compartmentalizing these volatile price swings from where it came from would be the start of the next cyclical price pattern.