In almost every market environment, there are assets we want to buy and assets we want to sell. That holds even when we think the only option is to sell.
Recently, the strong buys have been in commodities and cyclical areas of the market, while bonds and the major stock indexes have sold off. That's dramatically changed in recent weeks, though.
Now, all the major asset classes – bonds, stocks, and commodities – are under pressure, as bears come for the leadership groups. It seems nothing is immune to bearish price action these days.
Despite the broad selling pressure, there's still an asset we want to buy: the US dollar. That’s right, the good old greenback! It’s one thing the bears can’t seem to crack.
If we think about it from an intermarket perspective, a defensive bid for dollars makes sense given the downside pressure on risk assets across the board. We don’t think it’s a coincidence.
Regardless, the USD is strong and shows no signs of changing anytime soon.
Monday night we held our June Monthly Conference Call, which Premium Members can access and rewatch here.
In this post, we’ll do our best to summarize it by highlighting five of the most important charts and/or themes we covered, along with commentary on each.
From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley
Whatever we’re looking for, the market has it.
If we’re searching for large topping patterns and strong downtrends, there’s plenty to go around, especially in the bond and stock markets right now.
Some people love taking the short side, feeding on the doom and gloom narratives accompanying the selling pressure.
But if that’s not your cup of tea, plenty of markets are trending higher. If you’re more interested in assets making new highs and like buying high and selling higher, look no further than the currency market.
When it comes to forex crosses these days, it’s simple.
All we have to do is put the US dollar in the numerator or place the Japanese yen in the denominator, and we get big bases that have either broken out or are on the verge of breaking out.
It’s that easy.
We’ve highlighted the yen in recent posts, so today we’ll switch gears and focus on a couple USD crosses from northern Europe.
From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley
King Dollar is reasserting its reign at the expense of major global currencies and risk assets.
What started as a potential failed breakout last month is proving no more than a hard retest, as the US Dollar Index $DXY broke to fresh 20-year highs yesterday.
From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley
The Japanese yen continues to slide.
In early April, we highlighted the multi-year base in the USD/JPY cross. We were anticipating a significant breakout based on the broad weakness in the yen.
Even gold, one of the worst performing assets, looked strong denominated in yen.
Not long after the post, we got the breakout we expected. And, two months later, the USD/JPY is kicking off its next leg higher, printing fresh 20-year highs.
Let's take it a step further and outline some trade setups in other currencies denominated in yen.
Remember, everything and anything seems to work priced in yen these days.
First, a quick revisit of the USD/JPY chart we shared in April. Here’s the updated version:
We held our June Monthly Strategy Session last Thursday night. Premium Members can click here to access the recording and the chartbook.
Non-members can get a quick recap of the call simply by reading this post each month.
By focusing on long-term, monthly charts, the idea is to take a step back and put things into the context of their structural trends.
This is easily one of our most valuable exercises as it forces us to put aside the day-to-day noise and simply examine markets from a “big-picture” point of view.
With that as our backdrop, let’s dive right in and discuss three of the most important charts and/or themes from this month’s call.
From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley
The US dollar is on the ropes as global currencies bounce back.
After failing to hold its breakout earlier in the month, the USD looks vulnerable against a growing number of currencies.
The pound and euro are catching higher. The Swiss franc is rebounding off its recent lows. And the commodity-centric Australian and Canadian dollars remain resilient.
We can add the Mexican peso to this list, as the USD/MXN cross broke down to fresh 52-week lows yesterday. This breakdown supports the near-term bearish argument for the dollar.
