Standing in the shadows
It’s often said that it’s far easier to predict where a market is going when you’re sitting on the sidelines. Not being directly involved in a market allows a clarity of thought lost to all but the most intellectually-detached traders. Most people find their views get distorted either by their positions or P&L.
However, my recent track record of predictions would suggest that this belief is either completely false or that I am indeed, as many who know me maintain, a bit of a Muppet.
Over the past few weeks I have voiced my opinions that the worst was over for the equity markets in general and financial stocks in particular, that it was time to buy dollars now and wear diamonds later, and that the FX market was poised to experience a sharp slowdown in volumes.
And yet equities are still seemingly in freefall despite the bounce that occurred in New York on Wednesday, and the dollar reached a new low against the euro this week. These two factors have helped drive spot volumes higher again and made me look like a very reliable reverse barometer. Readers will be waiting for me to announce my position, so they can all go the other way.
But I have to say, I’ve not given up yet. The euro’s retreat from above 1.60 may be just a pull back before the dollar rolls out of the front door and disappears down the street, having already fallen out of bed and down the stairs.