We have closed out a remarkable active month for the markets. However, some of the most prominent headlines through the past weeks don’t measure up to the hype in performance much less the potential for follow through moving forward for continental currency traders.
On the one hand, we have the endless amount of ink spent on the S&P 500 and US equities through the period. A record high and impressive rise after the US election is certainly impressive, but doesn’t reflect the birth of a new trend nor does it compensate for the stretched sentiment and fundamental imbalance between price and value.
Among some of the other moves this past month that present a contrasting view whether we evaluate them on a monthly versus daily basis (technically and fundamental) include: the Dollar, volatility and even gold. The VIX has seen a sharp decline through November as was expected with the passing of the US Presidential election. Yet, when we look at the full history of the index, we find that we are near a natural low. For the Dollar, a strong month pushed the ICE Dollar Index to a 13-year high. The rally breaks an extended period of congestion, but that doesn’t mean it is the continuation of a larger trend