Qualifying the Quantitative

By: Erik Swarts | Wed, Oct 10, 2012
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If you've followed my work over the past 18 months, there is a consistent theme towards the US dollar:

It's a relative game - global finance, and QE or not - the cycle points higher for the dollar.

Here is an updated chart from a few weeks back of that notion which compares the last time the dollar made a secular low.

1994-1997 USD 2010-2013 USD
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Helping things along appears to be a spring low taking shape along a tighter time frame. This is a much different structure than the bear market rally the dollar exhibited after QE2 was enacted. It is actually quite similar, both in structure and momentum - to the March 2009 low in the SPX.

March 2009 SPX Low - September 2012 UUP Low
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Considering my work with the Aussie points to the inverse of this dynamic, I feel quite confident in my longstanding expectation for the US dollar to continue to strengthen.

2011 SPX 2011 - 2012 FXA
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Erik Swarts

Author: Erik Swarts

Erik Swarts
Market Anthropology

Although I am an active trader, I have always taken a broad perspective when approaching the markets. I respect the Big Picture and attempt to place each piece of information within its appropriate context and timeframe. I have found that without this approach, there is very little understanding of ones expectations in the market and an endless potential for risk.

I am not a stock picker - but trade the broader market itself in varying timeframes. I want to know which way the prevailing wind is blowing, where the doldrums can be expected and where the shoals will likely rise. I will not claim to know which vessel is the fastest or most comfortable for passage - but I can read the charts and know the risks.

I am not a salesperson for the market and its many wares. I observe it, contextualize its moving parts - both visible and discrete - and interpret.

I practice Market Anthropology - Welcome to my notes.

Erik Swarts is not a registered investment advisor. Under no circumstances should any content be used or interpreted as a recommendation for any investment, trade or approach to the markets. Trading and investing can be hazardous to your wealth. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor. This is strictly for educational and informational purposes only. All opinions expressed by Mr. Swarts are subject to change without notice, and the reader should always obtain current information and perform their own due diligence before making any investment or trading decision.

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