PartTimeGenius
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$SPY $GOLD $DOLLAR walk into a bar

AMEX:SPY   SPDR S&P 500 ETF TRUST
Team, Welcome to another overview of the long term landscape of the market. It's been several months now since we've turned bearish on the overall market and although nothing seems to have happen yet, I just want to say that NOTHING HAS CHANGED (STILL BEARISH!).

* TAKE AWAY FROM POST: We're expecting to see
  • A Weaker Dollar
  • A Rise in Gold Prices
  • A significant market pull back

Now Let's get into this chart. So what we have here are three line charts ( Dollar index - TOP GREEN , Gold index - MID GOLD and SPDR Index - BOTTOM BLUE). As we can see there something changed dramatically right before the market peaked in Sept 2018 and the melt down that followed through to the end of the year. What do we mean by this, prior to the Sept 2018 peak we saw the inverse relationship between the Dollar and Commodities (e.g. Gold , Silver ...) (Red and Green arrows); however, once we peaked in 2018, both gold and the dollar have started to move in the same directions significantly (Purple Arrows) (dollar advanced ~ 20% while Gold did ~30% for the same period). By the start of the year we started seeing almost all the market moving in the same direction higher. Just another red flag that something isn't right in the current environment.

(NOTE: The volume chart was left out in order to conserve space, but it is absolutely necessary for better understand of Wyckoff method.
Also, only showing just an overview of the distribution schematic of the dollar. Will need to look at it own chart for full analysis)

another thing to point out is the fact that the dollar to be in this distributive Wyckoff pattern where:

PSY: preliminary Supply
BC: buying Climax
AR: automatic Reaction
ST: secondary Test
SOW: sing of weakness
UT: upthrust
MSOW: major sign of weakness
UTAD: upthrust after distribution ( Rising Wedge in blue)

Now, we can't really confirm that this is truly distribution into we see a breakdown. By all means it could just be a period of re-accumulation, but this is very doubtful. Also the fact that the dollar has been rising in the Rising Wedge pattern is another red flag signaling that we may see a weaker dollar in the weeks/months to come. And goes the dollar, so does the market (Although this pattern was kinda distorted in 2015).

As always...
***Let's talk about it...***
This is a really interesting chart. Thank you for this clear and concise presentation!
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Currently the stock market is being artificially boosted by the Feds various iterations of quantitative easing which dumps large amounts of printed cash into the financial sector which inflates the values of stocks, bonds, real estate, etc. The USD will eventually react to this once it becomes more obvious to market participants that we are in fact monetizing the debt along with the rest of the economy, in which case we may see a strong pull back of the USD, but the pull back may not be against other currencies in the basket since they are also printing out money even more aggressively than we are. It may come through as inflation in the CPI. The rise in gold is in anticipation of these factors converging as well as a general recession. If we have GDP contraction along with rising unemployment in combination with spiking inflation, Gold prices are set to sky rocket.
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@alexr451, Couldn't have said it better. I'm still trying to see what's the best way to represent inflation vs gold in a future post.
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alexr451 PartTimeGenius
@PartTimeGenius, I'm not sure maybe compare the strength of the USD compared to Gold, compared to the CPI, the maybe compare the fed funds to the M2 money supply. Something like that might capture the monetary picture.
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EURUSD may support the idea that we may see a weaker dollar soon. And the yield curve is showing that we might get one more pump but pull-back is imminent.
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PartTimeGenius Franknewman
@Franknewman, I agree...
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