Below is a chart and brief excerpt from today's Early Look written by Hedgeye CEO Keith McCullough.
So let’s get on with that and focus on last week’s critical Phase Transition (i.e. when my market signal suggests we’re moving from one TREND to another) in the Global Currency market:
A) US Dollar Index dropped -1.4% last week, breaking bad to Bearish TREND
Since my quant signals don’t undergo a Phase Transition unless the volatility of the asset’s price does, these often take long Cycle Time to play out. FX Volatility dropped -4.2% last week, taking its 1-month momentum to -17.6%.
That was enough to break what’s been Deep #Quad4 US Dollar support. As a reminder, the only plain vanilla Quad that backtests as USD Bullish is #Quad4. Our recent analysis suggests a Deep #Quad3 could be USD bullish as well.