Dollar Tumbles, What's The Move? - Real Time Insight

By Brian Bolan,

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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?

WISDMTR-J HEF (DXJ): ETF Research Reports

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing Stocks
Referenced Stocks: DXJ

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