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King Dollar, or Not?
January 19, 2024
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Table of Contents
Summary
We got the consolidation/pullback in the US indexes as well as the expected bounce (in progress);
What now? Nothing has changed much since yesterday;
I expect still higher into the 2nd part of next week, perhaps after a minor consolidation.
We will see if there will be more info for a more detailed update in the weekend report.
DXY and Inter-Sector Impact
In Late December, and again in early January, we called for USD (DXY) strength and a weakness in bonds, crypto, gold, and the stock market in the first couple of months of 2024;
So far, that started to happen, except the stock market, after a brief pullback, is again flirting with the last high (but my expectation is that in several days it will rollover);
What now? Figure 1 shows that DXY reached the nominal 40D cycle target (green box);
Although it could still push higher into the target box, normally, it is “allowed” to retreat now, based on my analysis, into late January, before continuing higher into Spring’24, with a potentially negative impact on the sectors mentioned above;
We will do a timely update as needed.
Figure 1 – DXY N40D cycle target reached.
Dogs of Wall Street
Some of the biggest disappointments for many are the lack of recoveries in SoftBank and ARKK despite the strong NDX performance (significantly driven by Magnificent 7);
Is this telling us about what might be coming?
I do not think so; it is likely just a consequence of holding many failed IPOs and some underperforming technology stocks (bad stock selection);
Figure 2 shows the chart of ARKK (SFTBY has a similar wave structure);
The bounce in 2023 is a 3-wave corrective structure, the wave 4 in EWT terminology, with wave 5 down to below Dec’22 low coming;
I will look at ARKK’s cycles in the premium section.
Figure 2 – Daily chart of ARKK.
Buzz On the Street
Some pessimism about Bitcoin emerges:
JPM expects more pressure with GBTC profit-taking:
TSM announced a good outlook, providing a boost to the semiconductor sector;
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