Since I don't subscribe to publications that have anything to do with any financial market, I'm not sure where Tom McClellan left off with this 52-week, forward-projected Eurodollar chart. According to McClellan, the S&P tends to mimic the net long positions of the Eurodollar (as a total of total open interest) from one year ago.
Looks interesting at a glance even though this may be more art than science...maybe not. I'm sure I could find a rainfall chart from Malaysia that at some point in time would look a lot like the price action of the S&P or Dow over the last seven years...if I looked hard enough.
Even so, this is intriguing enough for me to extend the chart through the remainder of 2013. These are weekly charts and there are many specific areas that do not match the price action of the market. In this case, the wild swings of the Eurodollar need to be looked at as though you were looking at a painting from one of those French Impressionists. Here's a few of my many favorites:
Hey look! A Renoir of Monet!
Now, just as you didn't focus too deeply on any one paint stroke, don't focus on the minor peaks and troughs of the Eurodollar's blue line; just take in the general direction or flow of the lines.
It looks like we are over-shooting the downtrend, (noted by the area highlighted by the white ellipse) and nullifying the predictive nature of the year-old Eurodollar action, but you can also apply this market "delay" to several time periods over the last six years.
Is this curve-fitted "art", or logical money science at work here? You be the judge. If the major peaks and troughs of the market continue to follow the major peaks and troughs of the Eurodollar movements that occurred one year ago, pay special attention to the downward brush strokes applied to the remainder of 2013. Sort of reminds me of one particular painting by Expressionist artist Edvard Munch.
Yeah, what he said.
______________________________________
Eurodollar: A US dollar deposit held in Europe or elsewhere outside the US.
