Ben’s Blowing Bubbles- The Dollar Carry Trade Explained and Why the US Dollar Will Sink the Market’s Rally
Today Nouriel Roubini said that he expects the US Dollar Carry Trade to continue for at least 6 more months. The Yen Carry Trade contributed to the collapse of Leehan Brothers. I’ve been wary of betting against the dollar depite wat would seem to be common sense logic for months now and the dollar has a 90% correlation to the stock market. Why have I shyed away? Not because I know much about the currency markets, simply because I trut my 3C indicator which you can try by clicking on my links to TeleChart and Stockfinder. Here’ what 3C looks like on the US Dollar Index and it is showing massive accumulation. Understand ho the trade works and what the indicator predicted that came to fruition and you will understand my bearish stance on the markets.
Here you can see the inverse relationship the dollar has vs. the S&P-500 (red)
Before the extent of the accumulation was revealed by 3C, the dollar had already been forming a bullish descending wedge. The Accumulation in 3C confirmed by line of thought. Now, through fiscal policy, specifically low interest rates, the Fed has taken the housing bubble and created a new bubble in the market and now, more than ever, the dollar is the key.
Our trial fund is heavily short (email me for more information)-now you know why.