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$USD Dictating Action?


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#1 thoughtpwr

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Posted 24 August 2016 - 10:47 AM

The $USD has surged back to its last resistance area of 94.95 with positive action over the last couple of days. It could be starting to accelerate after putting in a small double bottom at 94.1. Its possible an inverted H&S is in place and projects to 96.

 

This appears to have driven the downward movement in USO, SLV & GLD.  We have broken the 50 DMA in GLD this morning and SLV is on a nice run below the 50 DMA and is at the 72 DMA which is important to GLD/SLV. CCI is below -100 and could generate a continuation of the down trend in SLV. GLD would just be starting that today after reaching -100. My target on GLD (assuming it doesn't play catch up with SLV) is 124 over the next two days.  This is just under the 72 DMA for GLD currently at 124.7. Its possible GLD in a catch up move fills the gap to 120-121 in a sudden move. SLV looks like it could reach 17 where horizontal support exists, if it breaks the 72 DMA. 

 

The additional encouraging results are in USO. After a rumor driven rally above the down channel trend line yesterday, it has collapsed under the weight of the dollar and IF it finishes at these lows today, it's setup in a configuration to go much lower IF it can generate a gap lower tomorrow. This makes me think that the next couple of days are a dangerous setup for the SPY market. If the only news making event, FMOC comments, go against the market, we could see a very sudden drop, while the dollar overcomes overhead resistance and challenges 95.75- 96. I just noticed that USO broke yesterday's lows already, which I thought probably held throughout today.

 

A seasonal SPY buy exists at today's close, however I am inclined to wait out tomorrow's open before thinking about entry,since the setup in the metals and oil are negative and could lead to a sudden down draft that will still end up positive, but from much lower levels. Schaeffer has commented that the market is setup for a VIX pop like BREXIT through Friday, which would cause the most disruption to both bulls and bears. 


Edited by thoughtpwr, 24 August 2016 - 10:53 AM.


#2 OEXCHAOS

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Posted 24 August 2016 - 11:44 AM

What direction? :lol:


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#3 thoughtpwr

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Posted 24 August 2016 - 05:34 PM

GLD CCI is at -177 and SLV CCI is at -205 in its second trip there this week. The last two times these markets got this sold off, they continued for the next 6 days to a low. This implies these markets should keep the decline going over the next week and it might as well last 6 more days, since the Full Moon buy signal was a high on the 8/18 date and GLD has gone straight down instead of up over that time. This basically confirms the monthly cycle between Full/New Moon phases is inverted in this half cycle and we should expect the low at the New Moon 9/1 date.  Furthermore, I pointed out there are numerous seasonal buys that begin in early Sept for both SLV & GLD.  This action appears to potentially be a means to get in phase (rather than being out of phase) with the coming seasonality. 

 

USO appears to be set up to determine the size of the decline in SPY. If it goes down to 10.45, where the 34 & 20 DMA resides, this would set up a point of balance were a rally could ensue. If, however we blow through that area tomorrow & Fri AM, it probably foreshadows  revisiting the 9.25 low before we mount a inflation driven rally after Oct. I have been short from 10.45 on the USO's rocket higher. If we get down to 10.45, I may purchase the straddle and cover the puts, if we don't initially go lower in the next two days. 


Edited by thoughtpwr, 24 August 2016 - 05:36 PM.


#4 thoughtpwr

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Posted 25 August 2016 - 09:38 AM

Today, Thurs, the $USD is stuggling with resistance at 94.9.  A retracement is in progress, but I may have detected a buy signal ending the downtrend this AM.  If so the commodities will resume the downtrend throughout the remainder of the day. 



#5 thoughtpwr

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Posted 25 August 2016 - 10:42 AM

Looks like $USD has crossed above the down trend line, so likely to see commodities starting to weaken here.



#6 thoughtpwr

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Posted 25 August 2016 - 02:31 PM

Probability of an upward day tomorrow in GLD & SLV has me taking profits here and replacing it with a Sept2 GDX straddle for 1.59 per. I think it highly likely we gap opening tomorrow, but I don't know if its up or down. My take is down gap gets ridden up to fill the gap and up sells off into the close and goes lower. So I am using GDX as the most volatile instrument and will sell the call at the open if up or hold if down and continue to ride the other side presumably lower into next week.

 

USO certainly looks positive as the large gap never materialized. I still think the dollar is rising, even though it was week in the PM today. I am looking for a potential bottom in SPY on the open tomorrow and am likely to reverse my market position without a large gap down. 



#7 risk_management

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Posted 26 August 2016 - 03:56 PM

thoughtpwr, You are breath of fresh air on this board.  And something this board badly needs.  Thanks for posting.