Courtesy of Doug Short.
Yesterday morning, before the Fed’s announcement of the “New Twist” program, I discussed with Financial Professionals and Investors that when it came to portfolio construction, “Risk Off” was the real theme at hand. (See first chart below.)
The Dollar remains an excellent guiding light for portfolio construction, and the events of late in the Dollar continue to suggest a wonderful opportunity for those who are protecting portfolios, but a real “pain in the assets” for those who haven’t dialed down risk.
From a technical perspective, the U.S. Dollar found the 23% Fibonacci level as key resistance for months. Two weeks ago the Dollar finally broke this key level and then came back down to test the old resistance as support. This type of test was huge for the Dollar, confirming that a new rally was at hand. The Dollar did indeed find this level as support and now has broken higher — above other key falling resistance lines.
A good friend of mine says a “blizzard starts with a single snowflake that fits on the end of your finger.” The breakout in the Dollar suggests the possibility that a “financial blizzard” is approaching and that GE2 (great escape part II) is starting to accelerate.
(c) Kimble Charting Solutions
blog.kimblechartingsolutions.com
