The EuroYen cross rate was a great predictor of the last three market cycles. In each case, the cross reversed trend indicating that a bull or bear market was coming. In 2002, the Euro captured leadership. In mid 2007, when the S&P 500 was making new highs, the trend reversed in the favor of the Yen. In early 2009, the trend became extended breaking through the lower band leading to a bounce and the turn in the equity markets. But then the trend reaffirmed its bias to the Yen at the end of March - a month before the flash crash.
The trade of late has been constructive in terms of the price action but part of the trend model is worsening again arguing that the cross rate could once again move more in the favor of the Yen. However, as long as the low shown on the chart holds, the bulls should be ok and as a result, stocks should be stable to higher as long as the supports hold - and the trend model reverses course.
via StockCharts.com
"
No comments:
Post a Comment