Breakout

Sell Everything Except the U.S. Dollar: Technical Strategist

Jeff Macke
Breakout

The markets are about "reality over rhetoric" and "prices over perception," according to Rich Ross, global technical strategist at Auerbach Grayson. Ross is a chart purist, dismissive of more or less any other form of analysis.

Fair enough. I'll let the charts tell the story of his forecast and target objectives:

S&P 500: Sell the rally. Ross sees a possible move to as high as 1,220 before we roll over. Attentive Breakout enthusiasts may recall that this is the same level I mentioned yesterday. As a charting rule of thumb, the more people who are looking at a particular line, the more likely it is that level will prove meaningful. This suggests we'll have market sellers at 1,220 and buyers above. That makes no sense to you fundamental folks, but is true.

Dollar vs. the Euro: We've discussed the Euro endlessly on Breakout. Former support was at $1.40 per euro. Once that support was broken the Euro dropped to low 1.30's, while the S&P 500 spelunked to 1,072. Ross sees $1.23 in our future and it could happen sooner rather than later. We could see the Euro "spiral out of control fairly quickly," according to his tea leaves.

EuroStoxx: European stocks will drag down the rest of the world, as was the case with the U.S. in 2008; at least according to Ross. It's more or less that simple.

Hang Seng: If China is the driver of the global economy, then the world is headed for the ditch. The Hang Seng has put in a "multi-year distributive top" and is destined for a drop to the 6,661 level. That's a cool 15% + drop from where we are today, making the Hang Seng worth your attention.

Bottom line, this chart-watcher is forecasting a drop in more or less every asset except the greenback. It's a chilling but rather convenient outlook for U.S. investors as it means they can move to cash without losing buying power.

Ross warns investors to disagree at their peril. "There's a chance, albeit very small, that I'm wrong," he offers. We'll be sure to hold him to his forecast in the coming weeks.

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