In late March, we noted a strange phenomenon in the pan-European currency, the euro.
Back then, the entire world hated the euro. Debt-crisis stories dominated the financial news. The amount of negative bets against the currency was at an extraordinary high. Since the market always frustrates as many people as possible, these points of maximum pessimism are typically "relieved" by rallies that kick folks out of the trade. But a strange thing happened on the road to relief…
The euro did manage a tiny rally… but it was soon overwhelmed. Despite so many people standing on one side of the boat, the euro could not tip them out. We noted these rare occurrences are signs of EXTREME weakness… often a sign an asset will blow up.
As you can see from today's chart, the euro is doing just that. The currency has plunged in the past month. The world is waking up to the fact that you cannot spend your way out of debt. Are you watching this, Washington D.C.?
No comments:
Post a Comment