The dollar is moving back up… but does this change Gary’s forecast?
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Dollar going above 100 soon and the market should lose half or more of the rally.
Like I said last week, it appears the dollar did a double-top on Wed night (11th-12th) and Friday the 13th at 100.39. My forecast was for a pullback in the dollar for about two weeks, giving PMs, commodities, the Euro/Loonie time to have a counter trend move.
Then I absolutely expect the dollar to charge higher into mid-late spring pushing the 110 target before it puts in the intermediate top.
Well, one week later (from last Friday to this Friday) the dollar has not made it back over 100 and the PMs/commodities/non-dollar currencies have rallied.
Now on Friday afternoon we have the dollar at $97.71, the Euro at 108.27, and Gold at 1182.
Right on schedule.
Dollar at 99.32 now. It hit around 95.4 after hours yesterday and bounced back quickly.
Gary:
Where are you at with miners?
Good thoughts Gary. It is unclear until we see a few more days exactly what is happening in the currencies and commodities. Dollar did a major snap back rally today, but now is trending down to 99.02 in after hours trading.
Whay a nutty marketplace!
It could be that dollar just kind of grinds sideways to down for the next week or two, and this would allow for the counter-trend move in the commodities and Euro/Loonie to continue into next week.
At that point, I think the rally ends and the dollar climbs higher and commodities start their grind down into the spring.
For now more information is needed.
As a follow up at the end of the day here on Friday, this is exactly what appears to be happening….. The dollar is trending down and commodities continued to trend up.
People have been so focused on the FOMC meeting, that they forget that the dollar is actually did it’s double top on Wed and Friday of last week at 100.39. This has been an whole week so far of dollar down and PMs/and commodity currencies up.
Not playing the metals right now. They are too volatile and erratic. Plus I’m always nervous that a pre market attack will take the sector down.
I’m mostly just waiting for the perfect setup in the stock market. And by that I mean an intermediate cycle low. Looks like it will likely arrive in late April or early May, so not going to be doing much till then.
I agree Gary, but did take some positions in Silver, Gold, and PGM companies in the few days before the FOMC anticipating a top in the dollar and low in the Euro and Loonie. Just a nice little swing trade for the short term, then I am going into mostly cash and other sectors when gold pulls back in April/May and see how it goes from there.
Good thoughts today BTW.
gary, no attempt at sounding disrespectful but these cycles you described make no sense to me The daily cycle low you described yesterday was nothing more than a blip, How somebody can sit a wait for this kind of momentary change to make a difference in market direction is beyond me. I’ve been saying for months here that the dollar is and has been for months the driving point for the all markets. Not cycles, Astros, fibs, etc etc. It’s very simple to recognize. There is no sign of any real dollar top. The last time you described the same scenario was when dollar was to top at dxy 94. This was obviously nothing more than a consolidation for a further move up. We’re pretty well at same point again near dxy 100. Even a grade school technician can see any meaningful trend change is a close and hold below the previous dxy 94 level . The fed will determine when that happens by talking it down as they probably take little comfort with its acceleration. Probably a major factor for yesterday’s delay with rate increase language.
Gold is worth watching here as I’ve said for couple weeks, going nowhere while dollar maintains strength. Otherwise this market is looking as stated before, going no where fast and will come down of its own weight into the fall with some consequence irrespective of ongoing daily whipsaws.
Any observations in interest rate land? The US10YR and 30YR?
Buyers of these are either all a bunch of idiots OR they have some fabulous pair trade that is working OR rates are simply going lower. Of course this is currency related.
30YR Rates are now at the financial crisis low of 2.5% in 12/2008 and below the 2.75% recorded at the deflationary pulse in 9/2011.
Stock indices continue to make new highs with the same select few stocks while others simply stagnate between support and resistance and many are at or below their 2009 or 2011 lows.
Technically, as with the dollar, I can easily see a 30YR at 1.8% – 2.0%. This was not and still is not my normal belief, but I say to myself, “sometimes you must stick with reality of what is happening versus what I would like to happen.”
What’s the 10 year at, 2%? Anything below 4 SUCKS!
Gary,
I appreciate your incites regarding the cycle. It makes sense to me that the dollar might run higher for the next two weeks or so. Maybe it tops when the euro and dollar hit parity. I thought the USD might have topped last week, but it makes sense that it wouldn’t given the financial change that’s occurring this coming week.
I also agree with what you said regarding the gold wash looming. This wash should put in the bottom for many years to come. Just curious, Gary. When should the cycle low be for gold? I’m thinking early to mid April.
Always respect your take on things.
Chart,
Well cyclically gold’s 8 year cycle low isn’t due until sometime in 2016 so it could remain stuck in this trading range for another year.
Gary, from the dollar low point on the 16th to its spike high yesterday was more than five cents. Five cents in less that 72 hours on the worlds major reserve currency! That is a huge message and should not be ignored except at your peril.
Look, the dollar and the Euro are meant to play off one another. Like a teeter totter. Assuming there is good cooperation between the Central Banks in Europe (including England) and the Fed and BOC then we are safe to assume the Fed will get its wish for a falling dollar thus allowing it’s entry into a rate hike regime.
Europe has already used its maximum credit on a declining Euro to its advantage where a devaluation process is concerned and now the game shifts back to the US. I have a very high degree of certainty that we are entering a dollar decline phase that could go on for up to year during which time the ECB will add liquidity and stabilize the banking sector there.
None of this needs to make any sense but just give it time. I am certain a short dollar / long euro trade is now the correct bet. And that 500 pip move top to bottom was the shot across the bow that destroyed more than a few dollar longs and scared a lot of smart guys out of the pool.
It was a neon size message, Gary. Just listen to what you are hearing.
Let me get this clear! Bird you believe that the dollar will decline from here forward for 12 months? At that point it will put in another bottom then head where?
So far the verdict is yet to be out on your dollar top.It sure looks like you got it but we must await fridays close i would assume.
Euro would go where in the next 12 months?
The comment about twelve months is not meant to be specific but that is the length of the ECB buying process so I use it only as a rough guideline. I realize there is considerable doubt here about what I am saying. No problemo. I had the exact same experience when I called the Euro top (to the day) many months back. This is just the way it works. I don’t know why, but it does. I have no doubts about this call.
PS: Good to see you back. 🙂
Always here leaving tomorrow 🙂
Be back 25th..Vacation
Have a good trip. Where you going? I hear Europe is a bargain now! 🙂
Mexico,
Going to get me some silver coins 🙂
DO NOT DRINK THE WATER…………
Watch out for Montezuma’s revenge Glen : – )
In all seriousness, I’ve been to Mexico twice and had an absolute blast both times. Enjoy yourself…..this insane market will still be here when you get back.
Bird,
As you know I’ve been expecting an intermedite top in the dollar at any time. Maybe it occurred yesterday and maybe not. It’s going to take a few more days for me to determine.
People have been so focused on the FOMC meeting, that they forget that the dollar is actually did it’s double top on Wed and Friday of last week at 100.39. This has been an whole week so far of dollar down and PMs/and commodity currencies up.
What is going on folks?
Sorry if that sounds a stupid question but… everything seems to be up one day and down the neck. I wonder if any human beings are actually trading at all and whether the moves in the market are all being made by computer.
I have a feeling that a gold smackdown might be coming… as early as Friday…
Remember the Swissie spike and that massive move up? Look what happened afterwards. It returned almost from whence it came. The losers were those who bailed out at the peak and crystalized losses. There is a widespread assumption that the Swiss National Bank got killed on that deal. But look closely at the chart. They suffered nowhere near the assumed damage after the retracement took place so it was only quick conclusions in the heat of the moment that left readers of blogs wondering if the country was nearly ruined by removing the peg. Sharp moves like that do tend to retrace. That is my point and it should be expected by participants. Same with gold and the dollar move yesterday. But don’t get distracted by the noise. A lot of it is fear based stuff mean to scare you out of the pool and put you off the game. If you had no stops in place and did not sell into the panic you are already almost back where you started.
Bird,
You make good points with that post.
But, could the cycle low on gold and other commodities be at the same time of the cycle high of the dollar? I think it could…
That should be two or three weeks from now.
Either way, Very exciting times!!
It is possible Chartster but I have doubts because the gold low has not completed. It won’t matter a whole lot anyway but just keep in mind that all commodities will not bottom together. That would be too obvious and very convenient for traders who might all bet the same way. The market is meant to baffle, not offer easy answers. Instead, watch the CRB index for clues to the general trend of bottoming in resources and also watch carefully to see if money is flowing more aggressively into resource stocks, particularly oil and oil related ventures (not gas). I think that in the next three weeks we will have a lot clearer idea of what is really taking place but right now most will feel a little confused and even more will take the wrong side of the trade.
Understood. Safe to say, if you were sharp as a butter knife, you’d be long on metals? Lol
Nope, not long metals. Not yet. I have my own schedule Chartster and it is not the one everyone else assumes is the obvious trade. The metals declines have not concluded yet so they will not tick up one for one against a falling dollar.
The Dow is down 100 and the Nasdaq up 15.
It loos like they have decoupled?
Bloodbath coming up…..murki’em lol
Hey its murki.. You still waiting for oversold rsi? Stewie by all accounts you must be going in every 2-3 months? give or take. I like you risk reward method. Anyhow you or not yet?
Naaa i’m out. Waiting for my entry point which would be 1100 or below. Gold is in no mans land now and COT is in middle. It needs to get pessimistic or optimistic on extreme. Now it’s pointless to touch this IMHO.
What he said.
I do think this is the kind of movement that screams out for a big smackdown in gold on a Friday morning. Pumped and… dump.
Bob,
One thing is for sure, We get a pop either way. Historically gold pops on tuesdays and fridays. The same can be said for smack downs over the weekend.
Thanks…
Stewie feel the same way
glenfidish glad we are on same page hehe. I think AVI is right but i think he may be wrong that we will get big pop up before bloodbath. I think that has occurred already and we are going there now. This scenario is his 2nd one and i think his second one is right.
http://news.goldseek.com/GoldSeek/1426621656.php
I think they – the US Fed – will need to make an example of gold / silver sooner than later after Wednesday’s meeting. Hence why I am expecting a smackdown sooner than later.
As for the conventional stocks, well, I think that we could have a sizeable drop here also soon… but then they probably will go to the moon before a larger bust.
Been making $$$ on NUGT, DUST, and JDST. 10 – 29% profit on each flip over the past year. 🙂
I wonder if Austria’s problems are weighing on The US dollar?