Tuesday, July 26, 2016

Yen Gets Official Pepsi Max Rating, Expect Lower US Stocks

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*Japan is maxed out.
*We think their only incremental move will be in the form of fiscal policy which will not happen until August and voted in September.
*We are bullish on yen from here although there are many negative global implications for a strong yen.
*We think a strong yen should imply weak US markets.

The BOJ meets and will have an announcement to update their policy on Friday. We think the BOJ is totally maxed out. We've reported that the BOJ is running out of bonds to buy in Japan (Fed Prays). That tells us that whatever they decide to do this week, they are already at full throttle. That means the yen should strengthen against the dollar. Until recently there was a very tight correlation between a strong dollar/yen and a strong US stock market (NYSEARCA:SPY). For that reason we are bearish on US stocks.
Let's first look at a great chart of the US dollar versus the yen.
You can see here that the dollar was in a downtrend versus the yen. In reverse the yen is in an uptrend. The dollar is testing to change that trend to get more bullish. We think the yen will strengthen turning this chart back down.
Here's the chart.
The green and red is the dollar versus the yen. You can see it's been in a clear down trend this year. You can also see that the dollar is at the top end of the downtrend trying to test it and possibly break the downtrend, which would be bullish.
We think the dollar downtrend will continue, however. That means we think the yen will lift again.

Chaim Siegel has been working with hedge funds and mutual funds as an analyst and PM his entire career. Chaim specializes in earnings and predicts, analyzes and reacts to earnings and earnings events as well as developing current company stories with a hedge fund perspective. If you want his analysis real time sign up to the right for real time email alerts. #in, $spy, $qqq, $iwm, $vxx, $ycs, $fxe, $EUO, $YCS, ^GSPC, INDEXSP:.INX, #elazaradvisorsllc, CME Globex: ES Disclosure: These trades can lose you money and principal especially when using leverage BY USING THIS SITE YOU AGREE TO TAKE ALL RESPONSIBILITY FOR YOUR OUTCOMES AND LOSSES AND HOLD BESTIDEAS, ITS CONTRIBUTORS AND ELAZAR ADVISORS, LLC HARMLESS

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