It Is The Dollar Stupid! 2

By: Boris Chikvashvili | Thu, Oct 26, 2006
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Remember original article It Is The Dollar Stupid!?
Ok, here is the research that completes that article.

The graphs depict the matrix of SPX /USDollar-Index for SPX to satisfy the Fibonacci 50% and 62% retrace of the drop from 2000 into 2002.

So, for example:

if USDollar Index is to remain at about 86, current value, then SPX needs to go to about:

  1. 1470 to satisfy the 50% retrace, somewhat likely
  2. 1600 to satisfy the 62% retrace, unlikely

On the other hand the USDollar at 90 will top the SPX potential at:

  1. 1400 to satisfy the 50% retrace, likely
  2. 1520 to satisfy the 62% retrace, somewhat likely

So, the task "watch the dollar" is better accomplished via keeping the relationships on this graph. Simply one more view of potential SPX values until the top is reached.

For once, so you know where I come from.

Note that I am like anybody else, but very different. I know how do we make money and have fun with it. So I make money by going against/with the market, enjoy the challenges. If I did not have this I would not be in this business, the other side of me though is the pedagogical. I tell what we think, provide the research that many big name institutions can and/or will not, for free.

It is up to you how you will use it. Also pay special attention to the long versus short term meaning of what we say. Ask me if you do not get the difference. In short, I summarize the short/long term dilemma, this way. We make a short-term trade in the direction we most believe in and then see if the trade can be converted into the long-term one. Simple and clear no theories, just action.

I cooled to academia after unified theory of physics advanced, where are you Bogolubov (what a name - means GOD LOVER in RUSSIAN). What was left to uncover? Math is beautiful you can prove anything as long as you make convenient assumptions, Black-Scholes anyone? Difference between the right and wrong are the boundary conditions.

Do you get what I am driving at? There is no top or bottom on its own. It is discovered in the action, probing by bulls and bears and the outcome is probabilistic, just as the outcome of the measurements at the quantum level of physics is governed by the Heisenberg's "Uncertainty Principle" (remember Planck Constant H). Market is not governed by Newtonian physics world, where the measurements are assumed not to affect the objects measured.

No wonder I laugh when I see all kinds people telling that they know markets and/or somebody in past knew them?! All we can assert is the probabilities of madmen acting in the act of survival, which is what the markets have become, casino for sure.

Still, nobody is naïve enough to state that all of us affect the markets equally. There are those that equal more and let us leave it there.

Manipulation of the money and markets (all done for our own good, of course) have made all of us gamblers, like it or not, so learn your probabilities before it is too late.

If you cannot find our email, here it is

Just remember, like any priest or rabbi will tell you. Do what I do, not what I say/think!
Words convey the feelings that drive fundamental views, while actual trades convey the robot behind the man. Knowing your temperament will make you more money then knowing the markets, but please... please understand that the progress of a trader is a constant refinement of interaction between these two aspects, knowledge and temperament which are conditioned by each other. Do not underestimate the importance of geopolitics either, perhaps we should have all lived in USSR, sometime, to learn how to read between the lines. They did not want you to know. While today we are given so many lines that all we can do is keep reading 28 hours a day...

Have fun or the investment is worthless and to reach that state of mind you need to learn a lot and never stop doing it. So go to it, buddy.

Stay in touch with the, we just grabbed few more points of QQQQ, by going against the major trend exiting 50% at the bottom of the days drop.

See... this is what I mean by having fun.



Author: Boris Chikvashvili

Boris Chikvashvili

In short... I was supposed to be a theoretical physicist (Russia+Jerusalem Hebrew University, MS Physics, with distinction, toyed with QUARKS). Somewhere on the road to PHD I have discovered, first the Computers - at Carnegie Mellon University (MS EE, Fathered UNIX, adopted WINDOWS), and second Finance on Wall Street.President ITI,(Computer/Finance Consulting Firm) Consulted AT&T,IBM,SUN,CITIBANK,JP MORGAN, LEHMAN, MICROSOFT. Designed/implemented Trading Systems - BLOOMBERG LLP. There is nothing more to say professionally speaking.

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