TSP Talk Blog

I mentioned that no one should bet against the uptrend the dollar is currently experiencing. The dollar keeps on rising. Unbelievable. Now, why can't I apply this simple analysis to my own trading. We are obviously in a downtrend, yet here I am watching my account balance deteriorate. I should have never jumped in the market back in October and again this past week. Why can't I learn? That's a rhetorical question. Today's results does help, but I still have a long road ahead to get back to my all time high balance back in September of this year.

Have a great weekend everyone,

Jeff

You nailed that call. It looks like it wants to go higher. Did you hear Peter Shiff (sp?) say that this rally in the dollar will fail and it will eventually "collapse"? A little extreme, but he's been the broken clock that is finally right.

Not to sound defensive, but I was looking for a short-term pullback to the 20 dma, 50 dma ,and possibly the support line. It only made it to the 20 dma but that was enough for the I-fund to outperform this week.

This week's returns:
C = -8.32%
S = -11.86%
I = -6.57%

Now the dollar can continue higher.

From last Friday's commentary:

I am not saying that the I-fund will go up. But if the dollar does pull back, look for the I-fund to do a little better than the C and/or S funds - whether they are going up or down.

I would look for the dollar to pullback to the 20-day moving average, the 50-day moving average, and possibly even to the rising support line, which would be a 2%, 6%, or 8% decline respectively from the current level. This is a short-term observation and all bets will be off if the dollar does reverse up and make a new high.

Did you hear Peter Schiff say that this rally in the dollar will fail and it will eventually "collapse"?

Believe it or not I've been a fan of Peter for a long time, even as the market was hitting new highs. Yep, I'm not surprised at his 'most recent' prediction. His idea of asset allocation is

1. Buy gold
2. Build a bomb shelter
3. Store all your gold in a bomb shelter.

Now the dollar can continue higher

US Dollar failed it's breakout attempt today but is beginning to remind me of equities in 2006.

There were a few people on this board basically laying exactly out what we are seeing, ala Peter Shiff. The problem with that is that you can't make money being 3 or 4 years early.

The same situation will present itself on the upside where some folks will be laying out the bullish / bottom case for another year or two, before the market finally turns around.

That is why I'm not big of the fundementals but rather in the technicals / charts. My return sucks this year but we have all been looking for the head and shoulders to break with targets getting lower and lower.

The fundies tell us what may happen. The charts are much better at telling us when it happens. I just have to figure out how to make money with this information.

That's a big lesson I've learned Tom. All those fundamental arguments we see all over the internet only provide a theoretical economic landscape for the future. But so much can be done to manipulate the underlying principles that one cannot bet on any given chain of events. Even if one is right, there's the question of timing. It can and does take take years to play out many economic scenarios. I've been reading Mish Shedlock for years, and even though I've largely agreed with his positions on the economy, it does me little good to use it in any meaningful way to trade my account.

Absolutely. Those are great points. Harry Dent had a great thesis as well but he was off by about 10 years. People forget that Peter Schiff was pumping China and commodities when he published his last book, Crash Proof. He also strongly recommended that investors put their money in foreign currency as well. Anything can happen in the future, but those who followed his advice are sitting in a pretty deep hole right now. Like most of the theories, sometimes the long run really means 'the long run'.