Market Wobbly now that the Training Wheels are off…

While the negative correlation between the DXY and risk appetite as waned recently, an encouraging sign for the bulls, it does clearly show that the “carry trade” has had a large part in fueling the gains in risk oriented markets. It feels to me like it’s been much more laborious for the US markets to make a new high, given that important sectors such as the financials are seriously lagging and risk averse industries such as health care being being rotated into as a defensive stand.
What we are seeing now is the market trying to ride the bike now that the training wheels are coming off. Will it fall? I think so at the end.
Note, the Aussie dollar has been trading more in lockstep with the risk trade so I am focusing on this pair. Given the ugly cockroaches we’ve uncovered recently in the form of Greece, and Dubai, I think there are other roaches out there. We are already in a very fragile situation and any adverse or negative global surprise could just be too much for the risk markets to handle.
Proceed with Caution

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