As previously noted, the US dollar will commence its run to at-least 105, with a possible over-extension to 110.
The importance of this is that equities will be unable to have a meaningful and sustained rally, Gold and Silver will fall and Crude will likely fall to 15 which will create a circular schematic of pain around the market.
The timing of the end of this run in the US dollar will likely be towards the end of May to early June.
Predictions - SPX: 1865 (lower is possible but only if US virus cases fail to subside as April progresses) - Gold: 1360-1390 - Silver: 9.5-10 - Crude: 15
Thank you so much for putting all this information out there. There's a lot of money to be lost right now and a lot of un-contectualized information on the internet about the various dynamics at play in the market. You have presented the most thoughtfully explained a holistic understanding of these different elements and how they all work together that I have seen and I really appreciate it.
Can you explain why when dollar strengthens precious metals should fall? Because demand goes down? or people selling so they can hold cash and quantity goes up? or something else?
Gold is closely mirroring the SPY you mention that the GDXJ will start falling, does this happen before or after gold begins to fall? Are we talking a very slow gradual decline or a sharp drop?
PaulDeep19131
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@shadoweey, Gold is often denominated in US dollars; as the dollar strengthens, over a period of time Gold will fall as will other precious metals and commodities. It’s not necessarily a perfect correlation but it is highly correlated. Gold will be unable to have a lasting rally that isn’t sold until the USD shows indefinite signs of weakness which in my opinion is about 2-3 months away.
Gold spot usually holds its strength better than mining stocks - especially in equity bear markets. As such, miners will fall sooner and harder and take longer to rebound. However when the rebound comes, miners will surge faster than spot prices but it will indeed take longer.
- zSplit
Netxpert
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Are you long? It seems we are heading to secondary stage of downtrend, and today is start of short for at least until middle next week. First QTR earnings season starts in few days and it will be ugly for most of corporations.
PaulDeep19131
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@Netxpert, I personally don’t trade forex but I do analyze it because the strength and weakness in certain currencies are underlying signs of strengths and weaknesses in other sectors as is vital for accurate TA.