There are some really big moves taking place in the market. Many investors may not even see these things happening, but most were made aware of a huge shift when the Nikkei closed down more than 7% a week or so ago.
Since that time the Japanese markets have continued to slide from a high of 15,600 and change to below 13,000 at the present. That is a move of more than 16%.
Today, and here is where I get all real time with this insight, the trade has spilled over to the currency and we see the USDJPY dropping in a big way. The move this afternoon was so fast and furious that some suggested it was a "bust out" style trade.
A bust out trade is when a hedge fund or other large player sees a forced liquidation of a position due to the use of leverage on a position that has declined significantly. Think of it as a margin call, but in a much worse way.
So with the dollar getting thrashed today, is the a way to make some money? Of course.... but I am throwing that question back at our experts here at Zacks to lead you into / or away from some trades.
As for me, I will start with the idea of selling your DXJ if you have any. The ETF is down about 4% right now and headed lower. My thought process is simple, when there are bust out trades, more are right around the corner. Hedgies don't operate / trade in a vacuum, so look for more pressure on this trade over the near term.
Anyone have any other real time ideas for this dollar debacle?
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