J.C. Parets with Allstarcharts.com does fantastic technical work, and he is telling his readers to watch the Yen/USD exchange. The chart below shows this relationship; a falling line means that the Yen is gaining against the U.S. Dollar. The Yen is rallying hard today on the back of a manufacturing miss here in the U.S., and is pushing below some key technical levels. The short term uptrend marked in white has been broken, the $94 support/resistance level has been broken, and the 50 day Moving Average has been broken. A stronger Yen seems to be the play here.
This is important, because the Yen has been the Safest of Safe Havens, according to Parets. If we analyze the correlation data between the Yen and the S&P 500, we find a -.93 correlation over the past month, -.96 for the quarter, and -.77 for the trailing year. Money flows into this asset class when equity investors start to sell.
Copyright: hypnocreative / 123RF Stock Photo