• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Fat Tail Daily

Investment Ideas From the Edge of the Bell Curve

  • Menu
    • Commodities
      • Resources and Mining
      • Copper
      • Gold
      • Iron Ore
      • Lithium
      • Silver
      • Graphite
      • Rare Earths
    • Technology
      • AI
      • Bitcoin
      • Cryptocurrency
      • Energy
      • Financial Technology
      • Bio Technology
    • Market Analysis
      • Latest ASX News
      • Dividend Shares
      • ETFs
      • Stocks and Bonds
    • Macro
      • Australian Economy
      • Central Banks
      • World Markets
    • Small Caps
    • More
      • Investment Guides
      • Premium Research
      • Editors
      • About
      • Contact Us
  • Latest
  • Fat Tail Series
  • About Us
Latest

This Chart Says ‘Buy’, but Do You Trust It?

Like 0

By Ryan Dinse, Monday, 06 September 2021

In today’s Money Morning…the more important question…the last fair market?...back to ‘risk-on’…and more… The subject of trust came up in a recent editor’s call here at work.

In today’s Money Morning…the more important question…the last fair market?…back to ‘risk-on’…and more…

The subject of trust came up in a recent editor’s call here at work.

The general feeling was that trust in authority figures has never been lower.

People don’t trust their governments, they don’t trust big media, they don’t trust academics, and they especially don’t trust our economic masters.

In this void of distrust, uncertainty, fear, and anger take hold.

You’re probably seeing it play out in everyday life at some level.

You can certainly see it in the writings of many financial commentators.

A lot of them are calling for an imminent market crash, or at least a big correction, very soon.

And they’ll be right…one day.

But are they right, right now?

That’s the more important question.

With that in mind, I’m watching one chart very closely.

And contrary to the doomsayers doomsaying, it’s actually close to saying we’re due for another leg higher soon.

Let me explain more…

The last fair market?

If you’re looking at the pure indices — the Dow Jones, the Nasdaq, the ASX200 — things are in a clear uptrend.

In fact, we’re at near all-time highs on most of the world’s major markets. Usually that makes people more confident in the future.

The problem is a lot of people just aren’t buying it.

As I alluded to at the start, people just don’t trust that stock market valuations are a true reflection of reality right now.

Even less trusted are bond markets.

Central banks have explicitly stated they’re manipulating yields — so-called yield curve control — at an unprecedented level of monetary interference.

If you want to see how crazy this has gotten, consider the fact that there are 12 junk rated corporate bonds in Europe paying investors negative interest rates right now.

Junk rated bonds are rated below investment grade by the big three rating agencies because of the higher risk of default.

And yet today, you’ve got to pay them to lend them money!?!?

I don’t think I need to go into too much detail to convey how nuts this all is.

And many clues the bond market once gave on the true state of the economy are gone in my opinion.

So where can you look for a true signal you can trust in amongst all this fakery?

Funnily enough, it’s a market close to home — the Aussie dollar.

The Aussie dollar is the fourth or fifth most traded currency, a fact that belies the size of our economy.

The reason it’s such a trader’s favourite is that it’s by and large a ‘commodity’ currency.

The strength of our currency is basically a reflection of the strength of the commodity market, which is in turn a good gauge for global growth.

PS: We reveal four little-known small-cap stocks that cannot be ignored…Download your free report now.

Our currency is traded pretty freely. We don’t have the central bank muscle to intervene too much. It might even be the last fair market we have right now.

So what’s it saying today?

Check it out:


Aussie Dollar Share Price Chart

Source: Incredible Charts

[Click to open in a new window]

You can see our currency has been getting weaker since around May.

In fact, things were looking pretty dicey this month with the currency plummeting fast.

There were multiple reasons for this.

Taper talk in the US, more lockdowns at home, Chinese threats on trade, iron ore prices finally falling back a bit…

But with a good signal, you don’t need to know what the reasons are, you just need to know it’s a decent reflection of reality.

Which is why the strong bounce back since 23 August is interesting.

So what happened just over two weeks ago?

Back to ‘risk-on’

Keen market observers will probably remember 23 August was the start of the annual Jackson Hole Federal Reserve symposium in the United States.

The main message to the markets was that the Fed was probably going to kick the can down the road when it came to ending their loose monetary policy positions.

We’ll see if that initial reaction proves to be correct in the month ahead, but investors are clearly thinking this part has longer to go.

And the rise in the Aussie dollar reflects that.

The next few weeks will be interesting.

If the Aussie can push past the 76-cent level, then the flow of money back into more speculative positions might have legs.

Indeed, I’ve started to get multiple entry signals in my small-cap trading service, which suggests some early traders are already moving back in.

The question is whether this bounce back has legs.

If it fades away, then it could be time to batten down the hatches again. On the downside, a break back to 72 cents might suggest markets are going lower.

That doesn’t mean there won’t be opportunities though. A lower Aussie dollar can be good for value-driven exporters.

Keep an eye on it…

Good investing,

Ryan Dinse Signature

Ryan Dinse,
Editor, Money Morning

PS: Ryan is also editor of New Money Investor, a monthly advisory aimed at helping investors take an early-mover advantage as decentralised finance and digital money take over the world. For information on how to subscribe and see what Ryan’s telling his subscribers right now, click here.

All advice is general advice and has not taken into account your personal circumstances.

Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

Ryan Dinse

Ryan is a former financial advisor who over seven years helped more than 600 clients and had more than $150 million under management. This experience taught him that the mainstream investment industry has no interest in helping clients strive for greatness. He was told to make ‘safe’ investment plays and settle for average returns. It wasn’t good enough for Ryan.

In 2016, he embarked on a renewed mission: to help ordinary people lock onto extraordinary trends before they go mainstream. He’s an experienced small-cap trader and an expert in cryptocurrencies. He first bought Bitcoin [BTC] in 2013, when it was around US$600.

His crypto advisory is a must for anyone looking to make digital assets a part of their long-term portfolio. Check it out here. His tech advisory Alpha Tech Trader aims to identify and latch onto strong emerging opportunities in the tech sector, wherever they are in the world. Get more info here.

Ryan’s Premium Subscriptions

Latest Articles

  • Looking for the Catalyst: European Rearmament
    By James Cooper

    Every commodity cycle has a demand catalyst… James Cooper highlights one that few have paid attention to: conflict and military rearming. One of the primary drivers of higher metal prices. Read on to find out why this is important.

  • An oil price spike is in the offing now
    By Callum Newman

    Here’s one way to stop any speculative fever developing in the stock market. Get a big war going. That’s a real risk right now after the US attacks on Iran.

  • The Shopping Revolution No One Saw Coming
    By Charlie Ormond

    Amazon just sacrificed its most sacred business principle. You should be asking why.

Primary Sidebar

Latest Articles

  • Looking for the Catalyst: European Rearmament
  • An oil price spike is in the offing now
  • The Shopping Revolution No One Saw Coming
  • While Markets Snooze, This Microcap is Flying
  • Commodity Cycle: Are You Seeing It Now?

Footer

Fat Tail Daily Logo
YouTube
Facebook
x (formally twitter)
LinkedIn

About

Investment ideas from the edge of the bell curve.

Go beyond conventional investing strategies with unique ideas and actionable opportunities. Our expert editors deliver conviction-led insights to guide your financial journey.

Quick Links

Subscribe

About

FAQ

Terms and Conditions

Financial Services Guide

Privacy Policy

Get in Touch

Contact Us

Email: support@fattail.com.au

Phone: 1300 667 481

All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose and keep in mind the ultimate risk is that you can lose whatever you’ve invested. While useful for detecting patterns, the past is not a guide to future performance. Some figures contained in our reports are forecasts and may not be a reliable indicator of future results. Any actual or potential gains in these reports may not include taxes, brokerage commissions, or associated fees.

Fat Tail Logo

Fat Tail Daily is brought to you by the team at Fat Tail Investment Research

Copyright © 2025 Fat Tail Daily | ACN: 117 765 009 / ABN: 33 117 765 009 / ASFL: 323 988