Testing: 1, 2, 3

The dollar has reversed and is now testing the lows. 

Conversely, when we look at the price action of gold (GLD) its collapse exactly mimics the dollar’s reversal.

Taking into account the futures market activity in gold, it made new daily highs last week during the overnight session, Sunday-to-Monday. 

Using that knowledge on GLD, (adding it to price action) it retraced to 38%, of the recent down move this past Friday.

If we’re in a real bona fide reversal of the dollar and gold (posting more confirmation on gold tomorrow), then expectations are for continued gold downside during the coming week.

The dollar, bonds and gold, at this juncture are moving in tandem:  Dollar and bonds up, gold (and silver) down.

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Dollar Collapse, Now?

If the dollar is going to collapse, this is the place.

Both weekly and daily price action (UUP) closed at new lows.  Gold and silver have moved up in counter action.

However, if the dollar’s going to rally, this is the place as well.

The current uncertainty in the U.S. is all part of the equation.  The emotions of the populace are being tossed about at will. 

The plan is to (always, no exceptions) get the herd pointed in one direction so that a small fraction of speculators can establish their positions cheaply and with low risk.

When it comes to gold and silver it’s obvious where the herd is positioned.  They are ‘all-in’, waiting for the precious metals rally to continue.

The dollar, UUP is at the danger point. A small move in either direction may be the deciding factor.

Looking back at the historical literature available, it was Livermore that coined the term ‘danger point’. It was Wyckoff that published the interview with Livermore where he used the term.

The take-away is, markets do not change.  The same (similar) price action can be observed on charts that are a century old as compared to charts today.

Considering the UUP weekly trading range shown, it’s at the extreme low. 

There’s been no significant upward testing of the wide range.  Markets like to test.  That’s what they do.

Based on empirical and technical factors in prior updates, we’re anticipating a dollar rally and in turn, are short the Junior Miner’s, via JDST (not advice, not a recommendation).

Futures markets open in a few hours.  We’ll see if the current position will need to be exited at tomorrow’s open or if we’ve analyzed probabilities correctly.

As Livermore said, ‘you don’t know until you bet’.

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Gold Up, Dollar Down

The short position in JDST was exited during yesterday’s session with a decisive ding to one of the trading accounts.

Obviously, something was not analyzed correctly.

Pulling out to a larger view and looking at the correlated markets; bonds, the dollar and gold, it appears that bonds are moving higher first. 

It was probably a head-fake to think the dollar will move exactly in tandem.  That was the error plain as day, now.

The second error was not to see the first error. Enough said.

In fact, after yesterday’s session we see the dollar might be in the process of testing its trading range lows.

The dollar and the mining indexes, at this point are inversely correlated. 

The dollar was down sharply. The miners were up in an opposite move.

The dollar (UUP) chart below shows a potential forecast.  If UUP pushes lower from this point, it sets up a reversal condition (penetrating minor support) before it contacts major support.

Correspondingly, the miners and gold would be moving higher … for now.

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Before The Open

As expected from the November 1st, update, gold pre-market shows a gap-higher open.   Trading is around 178.80 – 179.00 which is a little above the resistance area shown in the original chart.

After the first hour of trading, the plan is to provide an update to see if there’s still a possibility of a reversal at this juncture (not advice, not a recommendation).

Correspondingly, the mining sectors, GDX, GDXJ are up in pre-market with inverse DUST and JDST, down. 

However, the big hitter, NEM is right at a 50% retrace off the lows of October 28th.  This is a possible area to stall and potentially resume a downward (or sideways) trend.

Other market actions that may have significant impact on silver/gold, are the four-standard deviation in the bonds to the short side.

As Steven Van Metre indicates, none of us reading this (in our lifetimes) are likely to ever see a set-up like this again.  It’s an historic extreme.

Bonds are down in pre-market along with the dollar … using UUP as the proxy.

The dollar has bottomed and is now in position to rally; completely opposite the established consensus.

At least twice now, Van Metre has mentioned Wyckoff in his updates.  He appears to be well aware of the significance.

In other markets, a position was opened in nat-gas, UNG at the last session.  That position was closed in the pre-market session with a slight ding of -1.2% to the managed account.

Even with record cold hitting large portions of the country, nat-gas can’t seem to get going to the upside.  Now, with its current action there may be a probability of lower prices (or stagnant action) going into winter.

We are leaving nat-gas alone for now and focusing on the historic bond set up and the potential effects when it all unravels.

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Dollar Death, Not Yet

The latest financial fad, the ‘dollar destruction’ narrative, appears to be losing steam … at least for now.

shutterstock_536563939

On the other side of the spectrum are the precious metals markets with their ‘all bets are off’, ‘this is it’, narrative.

Of course, it’s a dog pile of expert opinion on the whys of the dollar destruction.

Why not join nearly everyone else on the #MeToo, fiat currency bandwagon?  A safe bet no doubt; we all know how important it is these days to “stay safe”.

So, what’s really going on?

Since this site follows principles laid down a century ago, by Richard Wyckoff, it’s not important to know the “why”.  That reason changes daily if not minute by minute.  The truth behind the move will eventually come out; long after the trend has reversed.

As trading legend Ed Seykota inferred, if you want to make money, fundamentals are essentially a waste of time.

2020-08-06_17-09-41-UUP-Weekly-Force-Index-notesWhat we see is downward thrust energy on the dollar proxy, UUP is declining.  Downward enthusiasm is waning.

Does that mean go long on the U.S. Dollar?  Well, that’s up to the reader.  What is being presented here, is the latest hysteria is at least slowing down or coming to a pause.

As Jeremia Babe reports at this link, were just one or two innings into the greatest financial collapse of all time.  The dollar may go through wild excursions before potentially coming to its long awaited fiat demise.

 

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.