We still have Faber and Biggs quoted every 20 minutes on F-TV as dollar bulls. F-TV calls this a rally with legs. I respectfully disagree. The rally is a MOPE rally that was decided upon by money managers at many luncheon discussions about the carry trade.
Source: http://jsmineset.com/
A response to Jim,
People talk ad nauseam about trends they cannot change. The trading axiom follow the money was born from this reality. If the dollar rally had legs as suggested by F-TV, why do money flows continue indicate fade rather than support the assertion?
- Commercial traders have increased their short position as a percentage of open interest (as % OI) to 69% in combined futures and option market as the dollar has rallied. They have decreased their long positions as % OI below 10% into the strength. This is a classic example of fading the rally. The last time commercial long positions as % OI fell below 10% was 02/17/09. The DXY stood at 87.81 on 02/17/09. Three months later the DXY has fallen 82.30. Six-months later, it had fallen to 77.77.
COT F&O Money Flows:
- A rising junior to major gold miners ratio as gold corrects also suggests a fade into strength.
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