Dec 27, 2013, (9:00 AM EST)
I smell something burning. Is that my brain cell or your heart? ( 🙂 )
Back to another “Fri” day and back to some more fun, action and heart burn in markets today.
Bulls of the Dollar index (like me) are chewing their fingers as this index briefly touched below 80, its major support, thanks to the political bickering in Capitol Hill.
In spite of the Dollar index being down, bonds and Gold have not benefited and are still trading low. The conventional wisdom of markets says; if dollar goes down, Gold goes up.
Unfortunately for Gold, the Fed’s QE3 taper has been announced which means dollar will gain, if not now then later. Money is also exiting bonds for the same reason.
Now, this money outflow would have usually been parked in the beneficiary of tapering; that is the Dollar index. But possible budget crisis is stopping this money flow into dollar.
That leaves investors, or market whales, with only equities.
That’s why European markets have been jumping up non-stop in last few sessions, especially DAX (Germany).
Today, once again, greenback is trading low and it might, I repeat, might benefit equity indexes in U.S. markets.
It’s not a question of bullish or bearish trade, but simply a choice of parking big bucks in markets. The only empty “parking slot” is in equities so that’s where money will continue to go till Washington wakes up after the holidays and political process starts again.
I am not a market- whale and don’t need “parking slots” in markets (my pockets are more than enough to “park” all my money 🙂 )
The current rally is not supported by volumes and I don’t follow any trend that is not supported by volumes.
Right now, U.S. stock futures are positive but not with any significant margin. Are we going to see a pause in low-dollar, high equities rally? We might. But that will become clear only by the closing bell.
So you can jump in the trading ring and do whatever you want to. I’ll perch on the fence and enjoy the show ( as usual 🙂 )
Good luck, have a great session in markets today!
See you later.