The DXY breaks down, Again.

I've been monitoring the DXY this week and it has been a crazy learning experience. Initially, the DXY broke out of a descending trend only for the index to fall back into bear 🐻 territory. Just like many bear market enthusiasts around the world, I felt that it is beyond evident that the equity markets are highly volatile. Given the fundamentals factors - second wave of covid19 cases, record unemployment levels, slowing recovery around the world, politics and so much more - you'd expect investors to stay clear off the equity markets. However, the confidence by traders coupled with central bank 🏦 intervention has continued to push the equity markets higher this week.

Let me put this into perspective: In the US, DJT contracted COVID19, stimulus package talks stalled and the elections are going to be like no other; In Europe, cases are rising, and the ECB said EURO gains affected the impact of its monetary policy. This should have been a good catalyst to send the markets lower. It's interesting to note that JP Morgan and other banks are still on a buying spree.

This makes it clear that this could be it for the bears. Well, until US elections results are contested, inflation or deflation becomes unmanageable, or even the next financial crisis (nobody knows).

On the other hand, one thing is clear, the DXY will go lower for a while. With all the free money in the global financial system, and low debt, it's going to stay like this for a really long time. Experts suggest 2023, bonds and yields suggest 2025. We'll have to wait and see.

My target, a 2011-2014 trendline.

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Kommentera:

Investors expect U.S. equities to deliver more than 15% per year on average over the next five years. t.co/GtUzMz81WI t.co/6ZvdefB6O3