Is the strong dollar over?

Andrew Giovinazzi

Yo Pit Crazies,

All this recession talk has me wondering …

How high can the dollar go if the USA doesn’t raise rates anymore?

It’s a burning question for sure, as the economy continues to tighten.

Below is Livevol Pro comparison of two ETFs:

Jump on through to see what I think.

The Dollar and Sovereign Funds Are A Thing

The graph above is the iShares MSCI Brazil Index ETF (Ticker: EWZ), pink line, and the Powershares DB US Dollar Index ETF (Ticker: UUP), candlesticks …

As the dollar rises, funds like EWZ get hurt in dollar terms. That’s especially true fo a product like EWZ that is so commodity rich.

With the dollar losing steam, the correlation is clear: EWZ gains as the dollar fades.

I think this trend will continue as Jerome Powell’s choices get more limited. With a recession on the way, rates in the US won’t go through the .50 per month the Fed has planned.

I follow EWZ in Capitol Gains because it is an interesting trader that has long momentum moves. This ETF is very exposed to commodities that got oversold on the aggressive Fed posture.

Right now EWZ is in an upswing and I am targeting $39 by mid-June. EWZ June 30 35 calls are trading $1.10 and implied vol is fair to low at 36% for that strike.

Note: Many of you have credits with Option Pit that are expiring soon! Call Customer Care at 1-888-872-3301 redeem them before May 31!

The Rundown

Capitol Gains w/ Frank Gregory

Frank and I closed the last of our ExxonMobil Corp. (Ticker: XOM) call spreads. The net on the strangle was 81%.

Power Income Trader:

The Power Gains duo of Bill Griffo and myself closed two of three VanEck Vectors Gold Miner ETF (Ticker: GDX) Jul01 33/36 call spreads at $.90 for a 42% gain and a free ride on the last call spread.

Option Shopper

Licia went shopping at Walmart Inc (Ticker: WMT) of all places after retail and picked up a 65% gain so far.

Pro Trading Room:
Pro Room loves the Option Shopper Monday!