Quote from Ivanovich:
A late dip? Dunno, probably some people taking money off the table. I'd be careful of that in the days to come. I'm strongly confident there will be a significant correction next week. So confident, I am actually going to take a short right here at 1.2632.
I sincerely hope you are kidding for your own sake. Jesse Livermore's book mentions: "never try to catch a falling dagger" (wait until it sits firmly in the ground)
The way I interpret it is that this is one of those dreaded "short squeeze's" and no-one knows how high they can spike. It did look for a while like it was a standard double top and lots started to short before the market actually indicated it.
When I saw the market slowly drifting upwards I went long and loaded the boat - I figured it was only a matter of time before the inevitable stops would be hit. And hit they did
!
Now I am sitting on the sideline until the next part of the play becomes clear and I know what the likelyhood of the outcome will be. I am retired from the medical profession but we had an expresion: "In dubio - abstine" (When in doubt do not do anything)
Obviously you were not around when the Japanese goverment decided to "punish" the currency speculators and it made in 36 hours something of a 15% move (forget the actual numbers but it was in that ball park) It taught me a lesson I'll never forget.
I strongly feel currencies are running to a different tune than indexes and stocks.
I do not want to be an alarmist but.... coming monday there MAY be blood in the street and dickens to pay. I am saying this because I wonder if the reputed Asian currency remark ( mentioned earlier in this thread ) was an attempt by Bernanke at being screwd or just plain stupidity. (I never follow the actual news, the charts will tell me the long term stuff, if it is important news then I may hedge or stand aside, like now with Bernanke, he is still relatively unknown) If this remark is true then: Doesn't he realise that the USD is the default reserve currency in these countries? Now with this spike in the Eur-USD some in those countries may well decide to convert their holdings in Euro's, particularly when they have the weekend to think about it. And then same applies for those who trade on a weekly bar. And do not forget manufacturing / export / import: they may suddenly decide to "hedge". And if the remark has pissed off some ( Asian ? or other? ) government then it may just be the proverbial drop that makes the bucket overflow and tip that country towards converting their reserves (like Sweden?) (In Asia it is still a pretty normal thought process of "you scratch my back and I scratch your's" If you piss them off then why would they want to stick with you? They'll never forget!)
I am left wondering: is this the drop in the bucket that will start the inevitable chain reaction towards panic in the markets?
One thing is for sure: it will be an interesting opening next week and I am glad to be flat. (I did think about staying long but too much can happen over the weekend)
vital analitics
