Benefit from a strong U.S. dollar

November 11, 20134 Comments

Right now, it makes sense to have some USD denominated securities in your portfolio. Further, if you are a “Snow Bird” planning to head south in the next month or two (many of my clients are), it might make sense to buy your US dollars now rather than later.

usd

From an investment point, the USD is coming off of major support against a broad basket of currencies, as seen on the weekly chart below. It’s also attempting to break the near termed downtrend that began earlier this year. If this movement lasts, the US dollar has about 5% upside (to $23 on the chart above) before significant resistance. If you hold ETF’s based on foreign indices, consider buying some of them hedged to the USD if available.

Taking it a step further, if you like buying U.S. sector ETF’s or broad index ETF’s trading on the TSX, consider buying unhedged variations for more potential upside. Our weekly chart of the CD$ below clearly shows  continuation of the downtrend vs. the USD. Lower peaks and troughs indicate no base action for the CD$ at this time. An early start to tapering by the US Federal Reserve would only enhance this trend. Strong support comes in very shortly (around $0.94)—if this is not held, look out below.

CDN$

Keith speaking in Orangeville

If you live near Orangeville, come out to the Orangeville public library on Tuesday December 3rd at 1:00pm for the last visit of our 2013 Sideways book tour. I’ll be speaking about – what else–technical analysis techniques for profitable and safe investing.

 

4 Comments

  • Hi Keith,

    I saw you for the first time on market call last week and I think technical analysis, along with the fundamentals, is a great tool. From the information that I gathered on how you conduct your analysis, I find BBD.B met many of the “buy” indicator rules. A nice base for the early part of 2013 and then a break above $5, while holding that position for more than 3 days, something I learned from the show. So it looks like it broke the resistance, but as you can see from the chart it fell below $5 in November. Is this an anomaly or is there some explanation for a pattern like this. Your input is appreciated

    Regards,
    Steven

    Reply
    • Steven–normally I don’t like to reply to individual stock questions on this blog, lest I end up spending too much time answering questions about peoples individual stock holdings. But I will tell you this–the breakout rule is one that increases your chances of success–a bad fundamental report leading into ratings cuts by analysts (as in this case) forgoes what the chart was telling you. News can change things rapidly – so you just have to accept the unknown as a risk. All things being equal, though, if you adhere to the “3-day break” rule, you will be better off more often than not.
      Thanks for the question

      Reply
  • Hi Keith,

    I saw you on market call last week and I enjoyed learning about technical analysis. My question is regarding BBD.B. Looking at the 2013 chart you can see that there was resistance at the $5 mark, which was broken and it held it’s value for more than 3 days, a rule I heard you speak about on the show. In November it has fallen back under $5. Is this an anamoly or is there some explanation for this? Thanks for your response

    Reply
  • I appreciate the response Keith. I don’t own the stock but was more curious to know if I was reading the trends correctly. Keep up the good work

    Reply

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