A Dollar Bounce – Likely A Dead Cat

If you’ve never heard the term “dead cat bounce” – here it is. A dead cat bounce is an industry term used to describe the upward movement of a given asset “contrary” to a larger degree down trend.

Dead Cat Bounce – In finance, a dead cat bounce is a small, brief recovery in the price of a declining stock.Derived from the idea that “even a dead cat will bounce if it falls from a great height”, the phrase, which originated on Wall Street, is also popularly applied to any case where a subject experiences a brief resurgence during or following a severe decline. (thanks Wikipedia)

In this case – I guess it’s not exactly a dead cat bounce, as the dollar has only just recently begun it’s expected downward fall – but I do expect a “bounce” all the same. As far as trading it goes – if you are an equities buyer – I imagine you should get some nice opportunities to buy in coming days, before this thing lifts off to new highs.

As a currency trader – I am not going to bother doing anything short of watching the dollar closely – and aim to catch it at its peak (perhaps around 81 late in the week) before re-entering “short dollar” positions across the board. It’s not worth trying to squeeze every single penny, and push any further short dollar positions now ( considering I am 100% in cash).

Best trade is no trade at all here – and as I’ve said many times before – I am not missing anything – there are a million trades – and chasing anything is a fools game.

$dxy Novemeber 26

$dxy november 26th

7 Responses

  1. schmederling November 26, 2012 / 8:06 pm

    Sounds like a plan…. positons closed…..

    USD/CHF – Short .85%
    USD/CAD – Short – .41%
    NZD/USD – Long – .95%
    GBP/USD – Long – .68%
    Eur/USD – Long – .85%
    AUD/USD – long.77%

    Nice run…. powder time….. Cheers…. Taking on PM options on this bounce out to Jan,Feb & March….. time for a break and just min monitoring….. cheers…

  2. Ronnie Byrd November 26, 2012 / 9:06 pm

    Kong, I sold my qqq short leg today at what should be close to good for a novice,done lots of studying on greeks since we talked and it appears I should come out ok on the whole trade as long as the world doesn’t blow up in the next 2 weeks,anyway thanks again for your help.I just ran through the Gary’s blog and saw hippie’s attempt to bite you, I really don’t get the agenda of some people.You are doing the right thing with the situation as it is currently and the statement you made was free advice based on your experience,I guess he is just “ANGRY” at all including himself.Maybe a little to much leverage on his books? Jeep on trying bro’,you handled it well.

    • Forex Kong November 26, 2012 / 11:15 pm


      Thanks alot man….I appreciate your support – really – and wow you’ve got it sooooo right with that Hippie fellow, I can only assume he is deep deep under water and not to happy about it.

      Thats great to hear about the options….Im sure everything will be fine – great work!

  3. Beksachi November 27, 2012 / 12:10 am

    Forex Kong,

    Just found your blog from Gary’s. Interesting articles you have and I look forward to following them.


    • Forex Kong November 27, 2012 / 2:21 am

      Beksachi! Yes! Welcome aboard!

  4. hf November 27, 2012 / 2:41 pm

    added back xgd.to @ 19.47
    still holding GDX calls
    happy trading all !

    • Forex Kong November 27, 2012 / 2:50 pm

      You’ve got the gorilla type mentality man – just be sure to watch your exposure / leverage – and always do a little math to keep yourself humble….like……waking up tomorrow to “War With Iran!” – markets drop -400 on fears of global blah blah….

      You know what Im saying…..I like the “long gold” sure…..just lookin out for you.

      Good luck man!

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