Niall Ferguson: US Dollar Could Lose Another 20%, $UUP Around $22 Support, Put/Call Open Interest Ratio and Short Interest (10/22)

On Tech Ticker from the Buttonwood Gathering, Harvard Economist Niall Ferguson said the US Dollar could lose 20% by year end. Major points he made:

1. The stock market rally from the foreign investor's perspective has been an illusion because "the dollar's depreciation negated all the appreciation of the S&P 500 from March". Why would they want to hold dollars with a sliding currency and no investment returns.
2. The real trade weighted dollar index is "only down 9% from it's post crisis peak, it could go another 20% and be well within historical probability."
3. Reserve currencies don't last forever.
4. "Fed could get pushed by the bond market into monetizing more debt".

Either way, watch the $22 level on $UUP and the downtrend line from early March. It is touching the 2008 lows and riding the downtrend. Either UUP finds buyers and gets squeezed above the downtrend or $UUP tanks below support. Also, there is massive call interest open on UUP. The Put/Call open interest ratio is at 0.11. It hit 6.0 in March. The P/C ratio has been around 0.11 since mid September. It could be hedges on large short positions, and probably is since short interest spiked to 3.1 Million on 10/1/2009 up from 680,000 shares 15 days earlier. I'm watching the price of high yield risk (HYG) and $SPY, both could damage support levels if people hop on the risk-free train. Watch out now!!!