The dollar looks like it is starting a rally. Yesterday I tweeted via DavidBDurandMD on Twitter that I had gone long the US dollar. Today I went short the Euro. There are ETF’s you can use to do this if you believe as I do that the US dollar has gone down enough for now.
The US dollar hit a long term up trend line over the past couple days and has bounced from it. That bounce will take it further. I cannot tell you if this will be a short trade or an intermediate term one, but either way it will pressure both stocks and gold (as well as other precious metals).
As for gold, the GLD gold ETF has failed a recent breakout above 139.54 and is moving down again. Given where the dollar is, the dollar rally is a strong reason to sell a failed breakout in gold.
I’ve written a very interesting article on the relationship of stocks (SP500 index), the US dollar and gold and how they have interacted over time and you can read it for free on my “Tips” access page once you get the FREE password. To do that, simply subscribe to my free Tracker and Tips newsletter below. Once you get the password back, simply log into the free private “Tips access” page via the blue navigation bar on the left of the home page (SunAndStormInvesting.com)
Since stocks are likely to move in the opposite direction as the dollar moves up, take a look at my free SP500Tracker™ newsletter. It will be out this weekend (and you can catch up with this weeks copy today – link to it sent to you by email) and again, it’s FREE, so please subscribe below if you are concerned about where the stock market may go from here:
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© 2011 David B. Durand, M.D. All rights reserved.