Here's an interesting trade I did from 9/18/09 until today. I traded a 10 day time frame . Back on 9/18/09 I was reading charts and most the major pairs seem over extended (ie. the dollar was oversold). I expected a pull back (ie. dollar strength) and to a degree I was correct and captured a small profit. I closed out in order to reassess with today's huge equity jump.
It seems that this temporary dollar strength did coincide with equity weakness. Perhaps a weak dollar and strong equity thesis has still some momentum left in it. Though it would seem today obviously contradicts that. We will just have to wait for a longer time frame for confirmation.
Certainly the upcoming earning season may skew this short dollar/long equity relation as expectations are set way high and firms have cut cost as much as they can already. Im sure come correlation studies would be useful in this situation.
More on this later...
-Alex
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