Back in the beginning of January, we speculated in A River Runs Through It – that the euro was approaching another important pivot; the last of which was completed through April 2011.
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Looking back, the pivot has resolved as expected and the asset relationships that flow with it have followed suit. The exception for the time being is the beta train of the Russell – which has marginally outperformed the SPX across the monthly timeframe to date. Considering the last RUT:SPX cycle comparative (see Here) has held on both the weekly and daily timeframes – we expect the Russell in the balance of March to tow the line it held in February and continue downstream. Taking a step back, we visualize the top in the euro as comprised of two extended moves down – both of which have bounced on long-term support extending from late 2005. We view the most recent pivot as likely the run that will break that support and reinforce downside propellents for the asset trends mentioned above – as well as other hard commodities and commodity currencies.