patrick.net

I started averaging in into emerging markets bond funds in the last two weeks as a play against strong dollar. In such extreme situations, the dollar can strengthen a lot more before it corrects.

What's good for the dollar:
- Chinese economy going down
- uncertaintly over Pimco outflows
- European economy going down because of the Ukrainian conflict

darlag

Can you translate this:

The dollar has risen in an obvious 5 wave impulse of Minute degree waves to complete Minor degree wave 1 . Over the next few months, Minor wave 2 will correct the overbought condition that currently exists, pulling back to at least the $84 dollar range, perhaps more. Extreme bullish sentiment exists currently, some 91% of analysts contributing to that number.

indigenous says

Can you translate this:

Sure. Impulsive waves move in the direction of the overall trend, corrective waves move opposite the trend. In this case, five waves UP means the trend is UP. The degree of trend is simply the relative time frame, Minute degree being days to weeks, Minor degree being weeks to months.

The current up cycle has lasted 6 months and counts complete, that is, the five necessary waves of Minor degree appear to be in place. Now the trend will reverse in a corrective wave, probably a three wave a-b-c zigzag, which will pull back to $84 dollars or less before it turns around and heads back up. The pull back correction will be wave 2 of Minor degree which could take most of the rest of the year to complete.

Extreme bullish (or bearish) sentiment is a contrary indication. 91% bull or bear is extreme. Thus a reversal is imminent when extremes of that magnitude are reached, which just adds to the probability that the EW count is reliably correct, and that the dollar will give back some of its gains over the next few weeks or months.

tr6 says

I started averaging in into emerging markets bond funds in the last two weeks as a play against strong dollar.

This will prove to be a mistake short term. The dollar is about to give up at least a handle before it continues its rise. A hedge won't be necessary for at least the next couple of months. Plus, since the dollar is headed UP long term, why hedge it? Just play it long.

Damn this is confusing.

You are saying that the dollar is headed down for the next few months.

But over the long hall it is headed up. But before then it will give up a handle, which is how much?

A dollar. I should have said 'well over a dollar' or something to that effect.