BarroMetrics Views: The DX and S&P
Figure 1 shows that since July 2001, the DX and the cash S&P have exhibited an inverse correlation. In addition, while minor swing extremes have tended to coincide, major tops and bottoms have seen the DX lag by four to six months.
I am looking for the S&P to top out and start a down move this week. If the correlation holds, this would suggest at least a temporary bottom in the DX,
Figure 2 is the Daily DX and it shows we are in the Primary Buy Zone. Figure 3 shows that we have lower time frame targets with my preferred zone being 79.40 to 80.14
As far as time is concerned:
- The Greenblatt-Lucas numbers suggest the low will occur May 24 +/- one day i.e. in the time window May 23 to May 25.
- The MRCI Seasonsals confirm the end of May low (Figure 4) and
- The Hurst Cycle, Channelyze software suggests the cycle lows came in on May 20. (Figure 5)
- If we do bottom sometime in the next two or three days, we can estimate that the DX top will occur sometime in August.
This leaves only a setup and trigger to enter the trade.
Figure 2 Daily DX
Figure 3 Price Targets
Figure 4 MRCI Seasonals
Figure 5 Channelyze
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