Hey, I know I always seem to need to give these things nicknames (Armageddon ’08, Fiscal Cliff Kabuki Dance, etc.). Maybe that is a reflection of how non-seriously I take modern finance on a fundamental level. What we have here are policy and media driven hysterias, both to the positive side and the negative, swaying an emotional collection of players to and fro.  It is more of a game than a science or well heeled, buttoned down profession.

So currently, on an interim basis we are working the 'Anti-USD inflation trade' (a bounce in inflation expectations and associated 'hard' assets) and the Euro QE 'Me Too!' trade, with its template being the US QE that has worked to hyper boost (stock) asset prices.

It appears that the mealy mouthed Fed, still refusing to bail out any savers that are left (both of them), has kicked another leg out from under the US dollar, which had for some reason been discounting a Fed that would begin raising the Funds Rate by now like a normal entity in a normal post-crash bailout environment would have done upon achievement of its objectives.

'But no, we just need to tweak a few more positive data points out of it or wait until we see the white’s of inflation’s eyes' implies the Fed. Whatever, the dollar is down this morning and the anti-USD inflation trade should get a bounce in its step, in line with one of our main themes. If the May low is violated, Uncle Buck could take a pretty deep correction.

The monthly view shows how deep it could go.

As part of the Anti-USD trade, the prime candidates, commodities and precious metals are green this morning.

Graphic from Investing.com

Within this, silver should lead gold.  Here’s the daily chart of Silver-Gold, still showing that potential.

But players would do well to heed the message of the last chart in this post, which is the weekly Silver-Gold ratio. If USD takes a dump and commodities and precious metals rise, the promoters of these things (and inflation) are going to lather you up so you feel well scrubbed and nice and comfy. Don’t be comfy. Stay alert and get the b/s detector tuned up now.

Going the other way, the Euro takes the other side of the trade going on in the US. European stocks have been declining dutifully toward targets we laid out well in advance. While the details need to be kept to NFTRH (along with a play on China), the plan has been calling for a strong Euro to help bring down the stocks to a buying opportunity for Euro hedged positioning (HEDJ). You may notice that I all but ignore the noise about Greece.

Here is a look at the STOXX 50 index.  I am sure you sports fans at home can plot some support areas.

The bottom line is that there is micro-term, where day traders play and I have no interest playing. There is short-term, where we can get some good, quick swing trades (as I have done since last September, long and short), there is intermediate-term, where the likes of the above plans reside, and there is long-term, where the next big trends will reside.

The 'anti-USD' trade noted above is just an outline of what could be extended trades on an interim basis. The real trend changes appear to still be many months out in the future. Remember that the gold sector has a long and dubious history of burping up bias reinforcement that usually ends with a majority of players finding disappointment. For reference, look no further than last year’s hype fest revolving around Russia/Ukraine, with a side of Ebola.

The 'anti-Euro' trade lays in wait and could be an extended affair if/when it gets going.  But it too will just be a play on the effects of policy and a world full of players trying to game the system.  It is a matter of who games best through good timing. The correction in European stocks has been weeding out all the momo’s who believed the financial media hype about how Europe is 2015’s great investment theme. The time to get in on part 1 was late last year.  Part 2 is upcoming for those who would tune out the media and be positioned properly.