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Wednesday, October 13, 2010
There's an interesting piece of research making its way around Wall Street this week.
It's from banking giant Credit Suisse… and it concerns the U.S. dollar.
As Jeff Clark outlined last week, the dollar has suffered an enormous fall in the past month… and is down 12% from its summer high. This is a huge fall for a major currency in such a short time.
The weakness is driven by the belief that the U.S. government will print money in order to pay for our huge "bailouts and handouts" stimulus programs and the debts they pile up. While that's a valid long-term concern, in the short term, shorting (and hating) the dollar is now the world's most popular trade.
Each time these extreme "dollar hating" levels were reached, the dollar staged a three-month rally 100% of the time… with an average gain of 2.5% (a big short-term move for a major currency).
There's a huge crowd huddled on one side of the boat… and the odds are excellent they're going into the water soon.
For some actionable ideas on playing the dollar rally, make sure to read Monday's essay How to Play the Coming Dollar Bounce. You'll find both a stock and a currency idea on trading the extreme situation in the dollar.
To get master-trader Jeff Clark's take on the dollar's chart pattern, make sure to read last week's essay on why the "technicals" are favoring a big rally in the dollar. Read the essay here: We Could See a Huge Rebound in the Dollar Right Here.
Treasury craze continues… demand for three-year notes sends yield to record low of 0.57%.
Global brewers soar… AB InBev, Fomento Econ, and Ambev hit all-time highs.
Skyrocketing commodity prices send fertilizer seller Agrium up 70% since early July.
Earnings today... JPMorgan Chase (giant bank), Apollo Group (University of Phoenix).