Fiscally Tightened Friday – Dollar Up, Markets Down – So What?

We told you it would end up flat and we told you about using SQQQ for a hedge as well as the XOM short play (opened at 89.60 yesterday) from yesterday's post so let's not get all "sky is falling" over this little dip, OK?  As I said to Members in Chat this morning:

Dollar up 0.3% and Futures down 0.2% and it's funny to hear all the theories on TV about why the markets are lower.  Japan is, of course up but pundits are baffled by that too.   I don't get it – are these people worried that they would be out of a job if they simply said "Sequestration is a form of debt reduction, which strengthens the Dollar and relatively lowers the price of equities and commodities vs. the Dollar."  I mean really, just say that and move on to another topic – would that be so hard?

As noted by Dave Fry, the Dollar will be right back to test the top of the range with another .14 gain at the open on UUP at about 22.50 and that's the danger zone for both commodities and equites but, overall, it's an over-reaction to a teeny-tiny little bit of tightening and it will all be washed out by another flood of free money from the Fed very quickly.  Even Japan sees this and the Yen has already exhausted it's decline, with a rejection off the 93 line this morning.  

Oil is now touching $90.50 and that's another Futures long (/CL) that we can add to our list.  

IN PROGRESS