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DXY Poised On Verge Of Break Out To Upside

Tyler Durden's picture




 

The DXY is about to break the 78.449 high last achieved on December 22: at 78.320 we are very close. Greece is helping. When that resistance is breached, look for Europe to start panicking and also all those who still have the dollar short trade on to start rushing through the exits.

Deflation-plagued Japan can not be too happy about the recent strength in the Yen. Alternatively, the question of when the ECB wakes up and follows Ben into the ZIRP rabbit hole, now that Greece is the catastrophic equivalent of California, starts becoming relevant once again. And if the ECB does lower rates, look for all hell to break out in FX land.

 

 

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Wed, 01/20/2010 - 11:52 | 199313 Burnbright
Burnbright's picture

Ugh well looks like it will have a run up for a couple more months possibly while gold is idle or dips to a new low for the year. Why can't this currency just die already.

Wed, 01/20/2010 - 12:08 | 199325 lizzy36
lizzy36's picture

when was the last time that dow was down over 200, spx down over 20 and nasdq down over 50?

anyone?

Wed, 01/20/2010 - 12:12 | 199329 Zro
Zro's picture

SPX punched holes through its current channel plus the 20 DMA. I wonder if we will get an erroneous ESH0 buyer/seller out of nowhere to drive markets once again.

Wed, 01/20/2010 - 19:17 | 199998 Anonymous
Anonymous's picture

When it's most advantageous to do so, maybe right before the SOTU address?

Wed, 01/20/2010 - 12:31 | 199363 Anonymous
Anonymous's picture

October 30, 2009

DJIA -249.85
S&P500 -29.92
Nasdaq -52.44

Wed, 01/20/2010 - 12:41 | 199385 Dixie Normous
Dixie Normous's picture

It has never happened, will never happen and if you think it is happening now then you must pinch yourself and awaken from your deep sleep.  (other than that, maybe the end of October 09?)

Wed, 01/20/2010 - 19:55 | 200047 BigBagHolder
BigBagHolder's picture

So Oct 30 was a clear buy, no?

Same here...?

Wed, 01/20/2010 - 12:08 | 199327 Chopshop
Chopshop's picture

how is everyone's gold doing today?

bitches.

is silver the new gold?

hahaha.

Wed, 01/20/2010 - 12:23 | 199348 Anonymous
Anonymous's picture

I don't think any trader worth his salt actually saw the dollar falling through the floor. The deflationary headwinds are just too strong for the dollar not to strengthen in the near- and medium-terms.

That doesn't change the fact, though, that the inevitable policy response to deflation will be ramped up QEs, stimuli, back-door monetization, etc. The long-term upshot is that the dollar will be ruined.

The correct play is to maximize short-term return by being in cash and liquid assets now, while buying PMs (and other commodities) when the price slides. Ignore PMs at your peril.

Wed, 01/20/2010 - 12:27 | 199355 order6102
order6102's picture

reporting live from MT, my lead, my gold and my M60 doing fine... lock and load my friend, lock and load

Wed, 01/20/2010 - 12:27 | 199356 lsbumblebee
lsbumblebee's picture

Fine thanks. Two of my junior miners are up today.

How's your stock in Citi doing?

Wed, 01/20/2010 - 13:56 | 199499 Anton LaVey
Anton LaVey's picture

Keyword: today.

Here is a question for you: how will your US$ do, say, 10 months from now? How about 10 years?

Think long and hard.

 

Wed, 01/20/2010 - 14:18 | 199542 Master Bates
Master Bates's picture

I like the dollar over the intermediate term.  I think that its been whooped long enough and too many people rely on the dollar's viability for it to continue to fall the way it has.

Over a longer term, it or any fiat currency is going down, but that's every currency that's subject to inflation pressures from central banks.

Still, I wouldn't add any new positions to gold for a little bit, because you can buy lower.

Wed, 01/20/2010 - 14:40 | 199571 DoChenRollingBearing
DoChenRollingBearing's picture

Master, yeah, OK, let 'em bring the price of PMs down.  They may indeed do just that.

Then I buy bigger!

But, point taken, a strong dollar is a nice thing to hold for a bit.

Wed, 01/20/2010 - 14:57 | 199595 Master Bates
Master Bates's picture

I think that there will still be money to be made in PMs, but the time is not now.

Wed, 01/20/2010 - 20:48 | 200107 Chopshop
Chopshop's picture

10 months ~ DX over 93 pressing way to either 96.xx or 103.4x

10 years ~ probably 60 if not much, much lower with gold pressing $3K if not $5K.

are you warren buffett ?

cause if not then WTF are you talking about 10 years from now for?

even he will be destroyed within what lays immediately ahead.

10 years, lol !

by the way: 'you' can sell BRK for the very first time ever.  i'm sure that's random too.

bottom line and the only thing that matters:

here is a question for you:  if you owned gold from yesterday into today you are poorer and if you traded GC / SI down alongside DX up and VIX to the moon then did you make money today or not ?

cause, in reality, adjectives and opinions are great, but, what did 'you' actually make today?

think long and hard.

Thu, 01/21/2010 - 06:45 | 200491 Anton LaVey
Anton LaVey's picture

10 years ~ probably 60 if not much, much lower with gold pressing $3K if not $5K.

Thank you - that's exactly what I wanted to hear, because I don't buy gold (the real thing, not the paper one) for the long term.

I have made 15+% on my original investment since I started investing. And if gold goes down a bit more, I'll add to that investment. Short-term profits or losses do not concern me at all. The price of gold may go up today: I don't care. If it goes down, fine, it's just another buying opportunity to me.

As someone, much wiser than I, said about the gold market:

"1100 is key support. 1180 is key resistance. Everything else is noise."

The key point is this: in the long term (10+ years) the US$ is toast, along with pretty much every single other fiat currency. This is my objective, this is my time scale.

And I suspect it won't take 10 years, maybe as little as 10 months to get there.

Wed, 01/20/2010 - 16:19 | 199691 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

My gold is fine thank you.  Silver is the new gold, yes.  This another BUYING OPPURTUNITY.  BTW, what are you holding?  Paper?  At least you have something to wipe with.

Wed, 01/20/2010 - 12:16 | 199335 Internet Tough Guy
Internet Tough Guy's picture

Like watching cripples run. Now the Yen in the lead...no wait the USD coming on strong...euro falling back...

Wed, 01/20/2010 - 16:14 | 199686 SilverIsKing
SilverIsKing's picture

and the winner is.......

Wed, 01/20/2010 - 12:17 | 199337 Anonymous
Anonymous's picture

My gold/silver has me up about 50-55% since this 27 year old started buying...

I'm sitting rather comfortably and every now and again, I play pirate.

Wed, 01/20/2010 - 15:00 | 199600 VegasBD
VegasBD's picture

I think im a lay out bunch of my silver on the coffee table tonight. When the roommates ask WTF, just gonna tell them I am playing pirate. hahahhah

Wed, 01/20/2010 - 18:11 | 199907 greased up deaf guy
greased up deaf guy's picture

arrrrrrrrrrrrrrr, mateyyyyyyyyyyyyyyyy!!! lol

Wed, 01/20/2010 - 12:18 | 199341 bugs_
bugs_'s picture

EU: Can we be Keynesian Mercantilists?

and if we try

will we make a crater twice as large?

Wed, 01/20/2010 - 12:19 | 199343 GoodBanker
GoodBanker's picture

"

how is everyone's gold doing today?

bitches.

is silver the new gold?

hahaha."

 

Oh my god! A 2.7% decline!? We've never seen one of those before! Ahhhhh... Sell, Sell, Sell!!!

 

Still, good call yesterday. It was noticed.

Wed, 01/20/2010 - 12:35 | 199370 Anonymous
Anonymous's picture

Has anyone ever wondered about how Kitco decides what scale to use for the day?

The other day it was 2$ intervals, and the action stayed well within those boundaries.

Today it is 5$ intervals. As if they had a hunch, that there should be room for a 25$ hit in the kidneys.

Maybe it is a stupid question, but I was just wondering...

Wed, 01/20/2010 - 14:22 | 199548 Al Huxley
Al Huxley's picture

The scale shifts to accommodate moves in the price, they don't set it out in advance.

Wed, 01/20/2010 - 12:25 | 199354 curbyourrisk
curbyourrisk's picture

US$.....told ya so!

Wed, 01/20/2010 - 12:35 | 199369 Anonymous
Anonymous's picture

Chopshop: F.U. asshole.

Wed, 01/20/2010 - 12:36 | 199373 Anonymous
Anonymous's picture

Are there any bond auctions this week? Today somewhat fits the bill of pre-auction market behavior...

Wed, 01/20/2010 - 12:37 | 199378 Assetman
Assetman's picture

Turbo Timmy might just want to ramp up those new Treasury issues and put them on cue.  The global flight to quality trade might just have some legs to it.

You hear that, Timmy?

Timmy?

 

Wed, 01/20/2010 - 13:25 | 199452 deadhead
deadhead's picture

i think you're right assetman.

the Dem mid term campaign fund, also known as the "jobs bill", which is quickly coming up in the legislative queue (after getting our boy bernanke in this friday), is going to require lots of dollars. naturally, those jobs will be state employees in Cali, Illinois, New York and some other states as well as for the unemployed to remain in their jobs at home collecting benefits (this is not a shot at those folks but another extension will happen), etc. 

also, with QE of mortgage paper allegedly due to end in march, would not this be a good time to get advance start on keeping the yields from soaring?

Wed, 01/20/2010 - 12:49 | 199398 Grand Supercycle
Grand Supercycle's picture

 

My previous bearish warnings for stocks is now confirmed.

My previous USD bull and EURO bear warnings are also confirmed.

UPDATES:
http://www.zerohedge.com/forum/market-outlook-0

In early 2007 I warned of an impending stockmarket crash.

I confirmed a bottom by early April 2009.

In mid 2009 I warned of an impending USD rally.

The uptrend since March 2009 has been a bear market rally contained within a much larger bear cycle that started in 2000.

Wed, 01/20/2010 - 13:05 | 199423 DosZap
DosZap's picture

Great!..............Drop to $800.00..........Duck on a June Bug.

This will be the best thing for PM's...........the buying will be pandemic, for the informed.

Wed, 01/20/2010 - 13:44 | 199477 Master Bates
Master Bates's picture

Well, I was just saying that the dollar is in a bonafide uptrend.  I'm a bit skeptical about this selloff in equities though.  I think that the S&P probably won't close below its channel and that we'll see a few more days of weak updays before the big whoopin comes.

I'd be skeptical about gold in the near term.  It will probably make another run before the summer, but I wouldn't take any new positions now.

Wed, 01/20/2010 - 14:30 | 199559 Anton LaVey
Anton LaVey's picture

I have to object to this:

Alternatively, the question of when the ECB wakes up and follows Ben into the ZIRP rabbit hole, now that Greece is the catastrophic equivalent of California, starts becoming relevant once again. And if the ECB does lower rates, look for all hell to break out in FX land.

I say it everytime this subject comes up, but Greece is peanuts. You heard me, peanuts.

Greece GDP = $357 Billion US dollars - 2008.

California 'GDP' (actually state GDP) = $1.5 Trillion US dollars - 2008.

European Union GDP = $18+ Trillion US dollars in 2008

Sure, it is going to be painful for Europe, but California's economy alone is 4 times bigger than Greece's.

And don't get me started on the Eastern European countries, OK? These are total midgets. Poland 2008 GDP, for instance, was around US$ 520 Billion. And Poland is BIG compared to some of the other Eastern European countries. Think Latvia, for instance.

All of this is noise, designed to distract you from the fact that (a) many US states are edging closer and closer to total bankruptcy and (b) Europeans want a cheap Euros, because it helps their exports! Germany, especially, has an entire economy geared for exports. And they are hurting, even though their policies have always been (officially) oriented toward a strong Euro.

Will the Euro go down? You bet. But this is not due to Greece, nor to any of the other midgets the US media likes to trot out and tsk tsk about.

Wed, 01/20/2010 - 14:41 | 199577 Anonymous
Anonymous's picture

That little Poland was the only EU country with a +GDP print. I wonder how they will fare with all the expats coming back home looking for work. They were proposing playing with their retirement system accounting, to make the deficts look better. My feeling it's not gonna be good unless the rest recover and wants their exports.

Wed, 01/20/2010 - 15:01 | 199602 Master Bates
Master Bates's picture

I do agree that there is an overall tendency to devalue currency across the world to help people get a competitive edge in exports, and the dollar has not been immune from this trend.

Still, I also see the dollar as being stronger than other floating FX currencies because the dollar is necessary for international trade, and as it falls, the holders of those dollars get screwed.  There is an international vested interest in keeping the dollar high, even if it means perpetual deficits for our country, because we are still the global reserve currency today, and most transactions across the world are still done in dollars today.

On a side note, that's why gold isn't going to 5000 bucks tomorrow.  It just won't happen in the near term.  People hold too many dollars to let the dollar tank.

Wed, 01/20/2010 - 16:25 | 199703 mw1
mw1's picture

I would guess that Gold demoninated in Euros in heading that way.

Wed, 01/27/2010 - 22:06 | 208560 Anonymous
Anonymous's picture

For now they are holding dollars and can afford to hold dollars. All it takes is a confidence event to lose faith in the dollar, or a major Us creditor nation going bankrupt such as japan forcing them to liquidate their fx reserves. The British pound was the reserve currency once too, and people had faith in it until the british default on the gold standard.

Wed, 01/20/2010 - 15:21 | 199621 Orly
Orly's picture

The DXY is ramping now because someone somewhere has decided that it is time to allow the Euro to tank while the USD recovers.

It is obvious in the charts that this is what is taking place.  Sell the EUR/USD pair to 1.270.

Wed, 01/20/2010 - 15:30 | 199629 Anonymous
Anonymous's picture

Remember: When the Dollar drops they scream "BERNANKE IS PRINTING MONEY". When the Dollar rallies they shut up. So pathetic.

Wed, 01/20/2010 - 16:35 | 199720 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

There is still a lot of BS money.  The fact of the matter is, every Cenral Bank has a printing press.  Jean Claude "Van Damn" Trichet is merely out BSing the BSer....for now.

Wed, 01/20/2010 - 16:12 | 199682 Jesse
Jesse's picture

 

Here is a clearer view of the same setup.

http://jessescrossroadscafe.blogspot.com/2010/01/us-dollar-dx-longer-term-chart.html

I really don't think the dollar will break out unless US equities can break these obvious uptrends.

But who can say when the central banks are stomping around the markets.

http://jessescrossroadscafe.blogspot.com/2010/01/us-financial-markets-now-things-get.html

Wed, 01/20/2010 - 16:23 | 199698 Orly
Orly's picture

I don't usually complain (at least I hope not...), but Karl Denninger had a piece about some pending 4X legislation from the CFTC.  In it, he says that traders are using up to 400:1 margin, which is true.  He also says that 4X dealers can allow the account to run to being completely wiped out, which is also true.  But I have never seen a 4X dealer that allows the account to run past the account value.  Obviously, to do that would be suicide not only for the trader but also for the dealer.

There is no 4X dealer, to my knowlege, that would allow your account to zero "and then some."

Also, the pip spread he uses varies from pair to pair and from dealer to dealer.  No commission is charged, it is just that you begin your trade with a negative balance, the spread of which is paid to the dealer.  Maybe 1.7 pips for a major up to 16 pips for some exotic, off-the-wall trading pair.

As far as rollovers and charges: sometimes the roll works in the trader's favor and sometimes against, depending on the interest rate differential between currencies.  The cost of rollover is simply carried directly to the trader, who may make a little or lose a little during the overnight period.  All else being equal, by the end of the year, interest payouts and charge-backs generally wash each other out and, unless the trader is using a huge lot size, can be ignored on a day-to-day basis.

Maybe Denninger should just stick to housing and banking articles and leave 4X to others.

Thu, 01/21/2010 - 09:20 | 200538 Karl Donglicker
Karl Donglicker's picture

Maybe I should just stick to IT support, as I am getting fucking pwned across

the blogosphere for this here Ticker, which shows I don't know shit about what

I get all them donations for spouting about.

Now I am going round claiming the real issue is something that I never mentioned

once on the original Ticker, hoping that no-one notices. Anything to avoid admitting

I am wrong. Fuck this is so humiliating.

I haven't been this humiliated since I appeared on Krudblow and said I was getting

heavily short at SPX 900.

I hope I won't lose any fawning sycophants gold subscriptions because of this.

I really need them subscriptions to buy a new laptop after the Chinese hacked

my old one.  And poisoned my cat. FUCK CHINA!

I knew I shoulda stuck to IT and left them markets to Sinclair, Schiff and Photoguy.

 

 

Wed, 01/20/2010 - 16:30 | 199711 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The DoeLarr to be Double Xcrossed soon (DXY).  Why?  Because they do not like you! 

I have the DXY moving to the upside while Europe scrambles and the Japanese continue to pound their heads against the wall (why did you buy into this?  do not ask me Samurai).  DXY to 82, then Khali buds take over as the green currency of CA.  The move down starts around March 6th, and will continue while all the cash leaks out from the banks.  DXY to lose 10%-15% from March to December.

Wed, 01/20/2010 - 16:33 | 199715 Anonymous
Anonymous's picture

Pick your method of measuring purchasing power dilution.

Choose your gamble.

You win, you live to play tomorrow intact.

You lose, try harder and good luck to you.

Everything else is a sideshow.

40muleteam borax

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