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 thatGE2 (great escape part II) is starting to accelerate.
(c) Kimble Charting Solutions
From The Dollar Indicator: First Flakes of a Financial Blizzard?.
Images: Flickr (licence attribution)
About The Author
My original dshort.com website was launched in February 2005 using a domain name based on my real name, Doug Short. I’m a formerly retired first wave boomer with a Ph.D. in English from Duke. Now my website has been acquired byAdvisor Perspectives, where I have been appointed the Vice President of Research.
My first career was a faculty position at North Carolina State University, where I achieved the rank of Full Professor in 1983. During the early ’80s I got hooked on academic uses of microcomputers for research and instruction. In 1983, I co-directed the Sixth International Conference on Computers and the Humanities. An IBM executive who attended the conference made me a job offer I couldn’t refuse.
Thus began my new career as a Higher Education Consultant for IBM — an ambassador for Information Technology to major universities around the country. After 12 years with Big Blue, I grew tired of the constant travel and left for a series of IT management positions in the Research Triangle area of North Carolina. I concluded my IT career managing the group responsible for email and research databases at GlaxoSmithKline until my retirement in 2006.
Contrary to what many visitors assume based on my last name, I’m not a bearish short seller. It’s true that some of my content has been a bit pessimistic in recent years. But I believe this is a result of economic realities and not a personal bias. For the record, my efforts to educate others about bear markets date from November 2007, as this Motley Fool