A Resumption of the Bear in Stocks
By Jay Norris
In many traders and analysts minds it is not a question of “if” but of “when” stocks will drop in a continuation of the bear market which started in 2007. We are in that same camp. The chart below is the S&P 500 stock index which is a proxy fo rthe U.S. economy and the global business cycle overall. We’ve painted in possible price direction over the coming months.
If stocks head south at an accelerated pace it becomes more likely that the major currencies will follow suit and we will see a bull market in the U.S. Dollar. Below we see a chart of AUDUSD with the momentum indicator MACD already below the centerline, which indicates an intermediate-term trend shift. We look at an uptick in this pair as a potential short-selling opportunity.
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Jay Norris is the author of the best selling book Mastering the Currency Market, McGraw-Hill, 2009, and a Senior Market Strategist with BrewerFX.com
To schedule a complimentary, interactive tutorial on determining market direction with Jay Norris click on One on One Tutorial
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. Risks include the potential that changing political/economic conditions may substantially affect the price/liquidity of a currency. Investors may lose all or more than their original investments.