Friday, March 13, 2015

($EURUSD) The dollar is on a roll. It has been a dozen years since it was last this close to parity against the euro – it fell below $1.05 on March 12 – or this strong against a traded basket of currencies. The greenback’s upward momentum is so strong that self-sabotage is the main risk.
The broad-based rally has solid foundations in monetary policy. The relatively strong American economy has made the U.S. Federal Reserve the only major central bank expected to tighten policy this year. So little wonder that options prices for most major exchange rates show investors have a marked preference for buying dollars over the next 12 months.
Granted, the rapid gains of recent days leave a lot of space for temporary setbacks or periods of range trading. With so many big bets that the U.S. currency will keep rising, any hints of bad economic news or second thoughts at the Fed can trigger short-lived scrambles. And bouts of profit-taking from time to time are inevitable.
But the strong dollar is itself the greatest threat to the dollar rally. A strong currency makes U.S. exporters, including IBM and Hewlett-Packard, less competitive and hurts reported profits at companies with big foreign operations. Policymakers may not care about currency translation rates on financial statements, but exporters’ jobs could be another matter.
The minutes of the Fed’s January policy meeting merely noted the drag on exports from exchange rate moves. Granted, the effect on the large and relatively closed U.S. economy would be limited. Still, the dollar index has risen nearly 5 percent since then and gained about a fifth in value since August 2014.
Any hint that the Fed is becoming less indifferent would deal a real setback to the dollar rally. Traders will be reading the runes especially carefully after the March 17-18 policy meeting.
 
 

Tuesday, March 3, 2015

($AU) I have bought Anglogold Ashanti today, since it looks like it trades at a support.

Thursday, February 26, 2015

($GFI) I have sold my entire position in Goldfields for a nice +8.2% profit.

Monday, February 23, 2015

($DVN) I have bought a second position in Devon Energy, which is twice as large as the first one. It looks like it can go higher from here.

($GFI) I have just bought the Gold Miner Goldfields from the NYSE, since I believe there is a tradable bottom around these levels.

Friday, February 6, 2015

($GE) I have sold my entire stake in General Electric, for a mere +2.27% profit, since it looks like dead money to me and prefer to raise some more cash.

($SPX, $SPY) According to the weekly survey from the American Association of Individual Investors (AAII), bullish sentiment dropped to 35.5% this week from last week's reading of 44.17%.  This week's reading is the lowest level of bullish sentiment that we have seen since early October.  Given the drop in bullish sentiment, it's ironic that the S&P 500 is having one of its best weeks of the year.