Yesterday, 09:13 AM
Post #6
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Posts: 7933
Joined: 20-September 03
Member No.: 99
re yen carry trade. In my opinion...it may get unwound to a degree and that will help in the upcoming correction...but all it will do is get "reset" and put back on again. I seriously don't think it comes totally unwound on an interest rate move from .25 to .50.
I believe OEX will follow a similar pattern to what I've outlined while three things happen...1. The carry trade will get "reset" 2. the money will be heading back into the big boys...IE: OEX. 3.The OEX:SPX ratio complete the backtest and move higher to eventually move above the red parallel marked on second chart..that's when the recognition of wave 3 up kicks in .....hitting critcal mass to coin a phrase. The third chart shows the relative strength of RUT leading the charge out of the 2002 lows....I think those ratio's will soon reverse as soon as oex:spx completes it's back test. The safe bullish trade will be to short RUT and long SPX....you would have to figure out the ratio though...probably short 2 ER2 for every 1 ES. but I'm not sure. Maybe someone could chime in on that.
http://stockcharts.com/c-sc/sc?s=$OEX&p=D&yr=0&mn=7&dy=21&i=p46084252480&a=91757908&r=4938.png
http://stockcharts.com/c-sc/sc?s=$OEX:$SPX&p=D&st=1990-01-01&i=p29730383462&a=98616671&r=7975.png
http://stockcharts.com/c-sc/sc?s=$SPX&p=M&st=1987-01-01&en=2007-12-31&i=p57885915667&a=68755843&r=6086.png