Tuesday Afternoon

Let The News Start Flowing

Like I said on Sunday night, it’s going to be an interesting week. FOMO, the “fear of missing out” is in full swing today with all of the right influences supporting it. It’s a good week to teach as well so versus a soliloquy let’s continue with what started last night with the word “relationships”.

CPI numbers were in line with estimates. That makes sense, post rapidly rising about a year ago, when inflation starts to level off, as it has, the rate of increase disappears but don’t fool yourself, inflation is still here and well above the Fed’s target rate. What has been reacted to is natural; if you are long the indices my heartfelt congratulations go out to you. If you are like me and waiting for a “wick” top to form, get ready, we are closer than we’ve been. See my article “I’m Wick Hunting” from earlier this month for a bit of a refresher. Remember, patience is a virtue.

One rule we follow is “buy when they sell and sell when they buy”. It is complimented with “buy on rumor, sell on news”. Looks like a pretty good set-up coming into focus here but remember, the markets are fickle. With today’s continued resurgence I would expect the VIX, the volatility index to drop like a rock but so far it hasn’t. Don’t know what the VIX is, what purpose it plays, click here. The CBOE is more than willing to educate you about one of their products and quite frankly do a great job.

So that’s one of the first relationships I’m watching this morning. The Dollar, how its future movement will cause a “chain reaction” worldwide, is next up on the agenda. I grew up being a currency trader. In days gone by, cycles in major the world’s currency markets, were identifiable and quantifiable. They still are except the average length of the cycle is not as uniform as in the past. The Dollar and how it affects everything else you trade is a subject I’ll address more completely in an upcoming course but for now let’s just look at the following:

1. What Happens When The Dollar Increases - Currencies usually traded against the Dollar decrease. Commodities, based upon the Dollar decrease as well from corn to coffee, gold to crude oil. When the Dollar rises, there is more than not an associated inverse reaction.

2. What Happens When The Dollar Decreases - Currencies usually traded against the Dollar increase. Commodities, based upon the Dollar increase as well from corn to coffee, gold to crude oil. When the Dollar falls, there is more than not an associated inverse reaction.

3. What Happens When Interest Rates Increase - When a given country or region increases their interest rates, more often than not, the value of their underlying currencies rise. Think about it, supply and demand is a simple microeconomic tool used for determining price for most anything. If supply decreases more often than not, price increases.

4. What Happens When Interest Rates Decrease - When a given country or region decreases their interest rates, more often than not, the value of their underlying currencies fall. Think about it, supply and demand is a simple microeconomic tool used for determining price for most anything. If supply increases more often than not, price decreases.

5. What Happens When Economies Falter - When economies in a given country or region falters the value of their underlying currencies fall. Think about it, supply and demand is a simple microeconomic tool used for determining price for most anything. If demand decreases more often than not, price decreases.

6. What Happens When Economies Improve - When economies in a given country or region improve the value of their underlying currencies increase. Think about it, supply and demand is a simple microeconomic tool used for determining price for most anything. If demand increases more often than not, price increases.

Alright folks, it’s a busy day; there’s lots to watch. I not only preach “patience” more so I practice it. Not having a position is a position and I’m looking to initiate one on the short side more than likely after the news hits tomorrow post the Fed’s action. I may be right, I may be wrong but I’m sticking with a plan, the same one that’s worked for years so check back later. I’ll post night and day this week as it’s a good week for me to teach and learn from; there’s always something to learn.

I’m just a young 68 years old; my Dad became a broker when I was 13. It’s time for me to ‘give back’ to all of you what’s embedded in my head. It’s not always pretty but it’s based on history . . . and history, unchecked, repeats itself as you are witnessing.

Everyone learns at their own pace. If you pick everything up the first time through, great but if not email me at david@thetickeredu.com so we can further help. Again, let me know what you want to learn, I’m all ears.

Sticking with yesterday’s theme here’s one from one of my favorites, the Moody Blues, “Tuesday Afternoon”. It’s only appropriate, eh? Wait until you listen to tonight’s song; I bet some of you already know what it’s going to be.