3 points to ponder -
• Dollar's 16% bull run over the past year is "about as extreme as it gets, historically speaking," according to analysts
• Oil falls into a bear market, sliding 21% from June high
• Gold concedes safe-haven crown to the dollar after a 6% drop in the year
King Dollar has just been going and going, reaching parity with the euro for the first time in 20 years. Unless it comes to exhaustion on its own, there seems to be no way to stop the rally, not with headlines by the hour about rampant inflation and one hawkish Federal Reserve rate hike estimate after another.
With inflation at 9.1 % and 41 year highs the Fed will be ready to respond with the hike of 100 basis points that will bring rates to a top of 2.75% from just 0.25% in February.
A team of Morgan Stanley analysts led by Michael Wilson wrote in a note Monday to clients of the firm:
"Ultimately, the Fed wants a meaningful economic slowdown to curtail inflation, and a stronger dollar is part of that cocktail."
Nothing on the charts say the markets will rally to all time highs, for that I guess we can only expect dollar/bonds/crude rallies to puncture some time but then the entry and exits using F&O May not be right. Only way is nibbling … if we have that faith that markets will be higher than current levels in next 3-5 years.
Personally with so much bearish undertone, I feel one of these days in next 1-2 months the markets are going to be a buy and rush ferociously to make a new high of 20k and retailers will not believe in that and finally start buying close to the top. But that's it … period. We could then never visit those tops then in this decade atleast just like the Japanese and Chinese markets. That would be a bear market in the truest sense.
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