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Knowing the Long and Short of a Structurally Weak U.S. Dollar is the Best Way to Fatten Your Wallet!

editor (May 23, 2007)

by Jack Crooks, Founding Editor, Crooks Currency Group

If you follow the markets, any markets at all, then you probably already know – the U.S. dollar is firmly entrenched within a long-term bear market that appears set to persist well into next year and possibly much longer. 

The anti-dollar theme is prevalent everywhere you look.  It’s in the newspaper headlines, you can hear it on talk-radio airwaves, and the talking-heads on TV just can’t get enough of bashing the buck. And if you search anywhere in the online world, you are just overwhelmed by the abundance of dollar-negative commentary on the Internet today. 

Of course long-term trends like the declining dollar theme are important to the media and investors; and it provides exceptional opportunities for making money over the long haul.  There’s no denying that fact.  However, you’ve got to be careful not to get so caught up in long-term, trends, that you miss out on juicy short-term profit opportunities. 

I think that’s a BIG mistake; let me explain why.

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The money-making opportunities concealed in short-term trends are just as important to me as those in long-term trends.  Unfortunately, something I’ll dub as “investor myopia” can sometimes prevent investors from earning the bonus profits that come from playing shorter-term trends.

The reason for this “myopia” is that the average investor just doesn’t always have access to the most recent, in depth research and analysis. You probably won’t be successful playing short-term investment trends, if you don’t have the time to devote to watching financial markets nearly around the clock; but that’s where I come in. 

The goal of the Crooks Currency Group is to offer timely investment and trading advice.  I put in long hours of research, tracking each twist and turn in currency market trends, so you don’t have to.  In fact, I publish several signature research and investment services, using easy to follow trading methods, aimed at raking in profit regardless of the market’s direction.  The only thing you need to do is be ready to make money at all times.

Let me give you an example straight out of current events in the currency markets; The dollar is bouncing higher versus the other major world currencies.  This means the buck is reversing its direction on a short-term basis, a corrective move against the prevailing longer-term downtrend the dollar is locked into. 

Of course if you decide to stay short the dollar during this bounce, you stand to lose a piece of the long-term gains realized by betting against the buck.  In time, the forfeited gains will be recovered as the long-term downtrend in the dollar resumes, but why should you ignore the potential to earn even more gains by taking advantage of the short-term trend change?

Well-timed trade positioning is your key to earning more juicy profits.  And if you utilize the appropriate investment vehicles, profiting from these trends within trends is a lot easier than you think.

It’s nice to make money while the U.S. dollar falls apart.  And believe me, there’s plenty more money to be made in that trade.  But it’s even nicer to make money in those instances when the dollar goes up as well, even if only in the short-term.

Regards,
Jack

Making ‘Cents’ of the Headlines

 

What Happened

 On Friday, the Reuters/University of Michigan preliminary index of U.S. consumer sentiment rose to 88.7 in the month of May, up from 87.1 in April.

What Analysts Expected

 Analysts expected the index would fall by 0.9 to a level of 86.2 – a stark contrast to the actual increase of 1.6.
How Markets Reacted
 On Friday, after the report, the U.S. dollar finished mostly lower versus the rest of the pack.  After the weekend, however, and with a relatively quiet economic calendar for this week, the dollar is extending its bounce and is mostly stronger versus the majors. 
What I Say
 I’ll admit that I was probably just as surprised as most of the analysts when this report was released.  Because despite the housing market’s excessive weakness, surging gasoline prices, and relatively sluggish retail sales data, the U.S. consumer is still able to stand tough.  By no means does May’s up tick in consumer sentiment signal that the U.S. economy, and the U.S. dollar for that matter, is out of the woods.  But news like this can sustain a dollar rally.  In fact, that’s what I expect we’ll see, at least until new data cuts it short.

 

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