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If our $ call is right, correlations may change big time!

Date: 2010-04-26T09:19:30.793
Author: Jack Crooks
Byline: Black Swan Capital advisory products are strictly informational publications and do not provide personalized or individualized investment or trading advice. Commodity futures and forex trading involves substantial risk of loss and may not be suitable for you. The money you allocate to futures or forex trading should be money that you can afford to lose. Please carefully read Black Swan’s full disclaimer, which is available at http://www.blackswantrading.com/disclaimer
Editor note: Long dollar FX Trading
Number of Views: 1049

If our $ call is right, correlations may change big time!

Our longer term dollar call for a while now is simply this: The US dollar entered a multi-year bull market after bottoming in March 2008. If that proves correct, it is likely we will witness some major changes in correlations that seemed to be such layups during the US dollar 7-year bear market phase. Many of us just assume the recent past will be projected into the future. But maybe the less recent past is a better guidepost.

Three major asset class correlation changes versus the buck, which we are already starting to see, include stocks, oil, and gold. Yet, we still see traders and analysts relying on the increasingly flimsy excuse of dollar direction to justify a particular move up and down in oil prices (ditto gold, less so for stocks). But, I guess that is to be expected. They likely wouldn’t be invited back to any party by saying: "You know, I have no clue why oil prices went down today."

We happen to think the 1992-2002 (closing high in July 2001) bull market move in the US dollar index is a good roadmap for the dollar move this time around. Already we have seen a similar pattern of initial rally off the bottom in the dollar index, then a nasty retracement fooling many into believing the initial move was only a bounce in an ongoing bear market; markets have a way of doing things like that. That happened during the last bull move as you can see in the chart below.

Did you miss it?

Did you miss our warning the first time around?

I sure hope not.

Back in June of 2009 we released a report detailing the reasons the euro would collapse:

But even as bad as things are for the fate of the euro, I’ve got good news (for YOU) ...
The Demise of the European Monetary System. So far, everything’s played out exactly according to our forecast in that report.
The Eurozone crisis ain’t over yet.

Nope. There’s a whole lot telling us the value of the euro has much further to fall. I mean, Eurozone officials are fighting off a nightmare that just won’t end; but you have the opportunity to profit if you act quickly.

When the euro dropped from $1.50 back in December to $1.35 now, our members made money over a nice chunk of that move. The recent pause is allowing some of the disbelievers to wake up. But accepting that the US dollar is no longer the dog of the currency world must come before everyone else’s eyes can truly open.

And chances are there are plenty left who’ve not yet seen the light.

Don’t keep your eyes closed.

Soon enough, everyone’s going to know the story, everyone’s going to be on this bandwagon. But if you wait until that point, it’ll be too late. The time is now to learn the story and capitalize on it. (Keep reading to find out how you can get our latest
FREE report exposing the lasting troubles for the European Monetary System.)
Start here and start NOW!

We offer an advisory service with exactly the mission described above. It’s called

And right now we’re offering our latest addendum to our June 2008 report. We’ve titled it:
PositionTrader FX, and it gives a thorough perspective on currencies at a pace manageable for the average investor (with or without any FX experience.)
Key Reasons Why the Euro is Heading to Par or Beyond against the US Dollar

Get it now to be sure you don’t miss out on what will be certain deterioration, if not a total and complete collapse, of the single currency we know now as the euro.

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