Thursday Sept 6 2012
The Dollar stayed higher longer than TLT but now the two have reversed with the Dollar leading the way down. Let's take a look.
In the top panel TLT rallied back to the expected 126-128 area and is fighting to hold its 50 day MA. In the main panel the Dollar experienced a fairly large trading range yesterday but closed under the 125 day MA. The significance is that The Dollar is a mere .6 points above its 200 day MA. Recall that most quantitative trading programs use the 200 day MA as a trading signal to go long or short.
To really appreciate what is going on, let's look at the group on the other end of the tug of war financial rope so to speak. As TLT struggles to hold its 50 day MA, Crude Oil backs and fills in an assault to valut its MAs.
Note that TLT peaked in late July as Crude Oil moved up. The 50 day MA has turned up nicely for crude oil and Crude has successively bounced at its 125 day MA just as the Dollar in the previous graph is failing at its 125 day MA. Interestingly Crude is also about .6 below its 200 day MA making this a mirror image comparison between Crude and the Dollar.
This will soon be resolved in what the media will no doubt dub a 'surprise' collapse in the Dollar as the Euro gains strength amid the gloomy unemployement reports for Spain and Greece.
Patience, gold stocks and crude are up this morning.
Breaking News TLT is down 1.37 on the open to 125.24........