If you're a technician or just wondering about the strong dollar and how long it can stay strong, you might find this of interest from cnbc.com/2015/12/29/this-could-change-a-lot-of-playbooks-in-2016-strategist.
As
2015 comes to an end, many on Wall Street are placing their bets on
what could happen in the markets next year. But according to one
strategist, an unforeseen collapse in the dollar index could not only send ripples across the entire market, but "change a lot of playbooks for 2016."
"Everyone
seems to be on the same side of the boat when it comes to the dollar,
thinking that long term it's going to go higher," Matt Maley told CNBC's
"Futures Now" on Tuesday. He noted that with an improving U.S. economy and Federal Reserve tightening
— while many other central banks are easing — the bull case can easily
be made for the dollar. "But a lot of people forget that the high in the
dollar was actually way back in March."
The
dollar index has traded in a sideways range for much of 2015, seeing
returns of more than 8 percent year to date, with much of those gains
having occurred in the first three months of the year. The index hit a
closing high of 100.18 in March and retested that level earlier this
month, forming what Maley, managing director and equity strategist at
Miller Tabak, said could be a double top."The last three times the dollar made a double top has been followed by a significant or even major sell-off," he said.
According to Maley, the dollar completed a similar pattern in January 2002, and saw a 33 percent decline in the three years to follow. It happened again in November 2005, where it fell 23 percent in the following two years and most recently in June 2010, seeing a nearly 20 percent decline in the following year, he said.
"We're still a ways away from confirming that a double top has indeed been formed," he noted. "But it could change a lot of playbooks for 2016 if that happens."
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