Wednesday, April 29, 2015

Chasing Our Tail....04.29.15

The suspected underlying weakness from yesterday's sub-pivot action picked up strength today with many of the big caps getting a heavy hit.  One of the most surprising (and disappointing) developments for some of the "smartest guys in the room" is the plunge in the dollar (UUP), which was on a bull run until recently.....and which is now plummeting with no clear support threshold in sight.  The Euro (FXE) meanwhile was a powerhouse of strength and the new M3 FX model already had it as a #1 pick so we were able to book profits on that move.
The M3 models are once again at odds with one another and the first trading day of the month is unfortunately Friday, which has an inherent bearish skew so the reliability of the technical signals is a complete mishmash.
An interesting aspect of the UUP daily bar chart below (also applies to FXE) is the nice parallel alignment of the Ergodic and ADX indicators....a situation we do not see in the SPY or QQQ.  The immediate implication is that the currencies are actually less subject to HFT manipulation than the indices ETFs.....a thesis that flies in the face of the commonly held assumption that the currencies are more subject to manipulation than stocks or ETFs.