When it comes to the U.S. dollar we get the negativity…But kissing the 1 year low on the DXY at 79.00 this morning is now overdone and sentiment by analysts and talking heads is as blind as the consensus long USD trade was in the 1Q ’13.
As the U.S. Congress approaches a deal today markets have been all of the buzz as early as the pre-markets.
Short Term Trade: When the VIX spikes and then closes below the previous day level the next day, it leads to a period of positive returns for equities.
Eight straight days of emerging markets (EEM, quote) outperforming the S&P 500 (SPY, quote). Emerging markets with help from Washington has outperformed as the DC stress has put pressure on U.S. assets.
Dollar weakness is to be bought: see graph of the DXY going back 1 year and you can see very good technical support at 79.75 area.
This has been the trading call on Gold for last 6 weeks. U.S. default/shutdown.