Good morning! I wanted to show you my latest AI charts for gold, the dollar, and the Dow – perhaps the three most important markets on the planet right now.
There have not been any changes, everything still points lower into early October, but I do want to point out a few things I think are impacting nearly all markets.
First gold: As you can see from my latest AI chart, gold is still forecast to decline into early October. From a technical and buy/sell systems perspective, gold is in a wide trading range – with a bias to the downside – and capped by resistance at $1,362.50 to $1,377 … and support at $1,330 followed by last week’s low at $1,305.
We’re looking for an early October low, which if the AI forecast is on the money, should see gold reach down to major long-term support which now stands at the $1,250 level.
Silver should follow the same overall pattern with major support coming in at the $18.45 and $17.50 levels.
Meanwhile, the dollar is poised for a substantial rally. You can clearly see it on my latest AI chart right here.
Two points:
A. Does this chart perhaps foreshadow a Fed rate increase later this month?
Perhaps. But I don’t think so. Janet Yellen and the FOMC can’t seem to figure out whether they are coming or going.
B. Instead, I think this chart is showing the flip side of the dollar, the euro. According to my cycles and indicators on the euro, it’s about to roll over (finally), sliding to below 1.09 first, then to below 1.05.
Technically, the charts on the euro (not shown) look terrible, and there is a real crisis now starting to brew in Italy, where the banking system is as much as 360 billion euros in debt (nearly $406 billion) and non-performing loans are as high as 17% – 10 times worse than non-performing loans in the U.S.
Moreover, Italian sovereign debt now stands at $2.46 trillion, a whopping 141.4% of GDP.
Keep in mind Italy is the eurozone’s third largest GDP, and the eighth largest in the world by nominal GDP.
Most importantly, Germany, the EU’s only real creditor, is once again reluctant to lend any more money to Italy and is instead pressuring extreme austerity measures on the country.
“Italexit” may be the next shoe to drop in Europe. There are growing movements to hold a referendum to leave the euro, just like Britain did.
Italy’s problems are certainly starting to bear down on the euro, which should push the dollar much higher (pressuring commodities temporarily lower).
Now the Dow Industrials: As you can clearly see from the latest AI chart, the Dow also points lower into October.
However, notice the spike low due in early October followed by a very sharp rally forecast immediately thereafter.
This reminds me of 1987, where the market crashed, then immediately recovered and went on to new record highs.
I do not believe we will see a crash of the 1987 magnitude, as major support has risen all the way up to Dow 17,000. But it is possible we could see one swift decline to that level, then a new rally will be born which will take the market to new record highs – no matter who is elected to the White House come November.
For now, hold all positions and related protective sell stops.
Lastly, but very importantly, I want to follow up on some of the changes we will be making to the service, per the brief announcement I made in my last webinar. My team and I are 1,000% committed to turning the track record around.
I’m not going to make any excuses or shift any blame. The forecasting models have been mostly macro-economically, right on the money.
However, with the benefit of hindsight, I seriously underestimated the lack of volatility in the markets over the last several months and the trading ranges we have seen.
Therefore, we are going to make the following adjustments, of course, always keeping our minds open to how the markets may change …
A. Shorter-term trades. ETF trades that last from say two or three days to a week. Trading a range, for smaller, but quicker gains.
B. Where supported by as much evidence as possible, longer-term unleveraged ETFs to capture the big trending moves when they start.
The reason for the unleveraged ETFs on the big moves is the “depreciation factor” built into many leveraged ETFs. Kind of like options, leveraged ETFs, both long and inverse, lose value each and every day as a result of some of the intricacies of how they are designed and managed by the issuer.
C. Occasional LEAPS options, or long-term calls and puts where warranted.
D. Certain individual natural resource and emerging market stocks we feel have enormous profit potential, helping to diversify the portfolio.
This will include focusing on European stocks ready to crash and burn, as ADRs, and country ETFs.
And …
E. More currency ETFs. I expect the currency markets to be amongst the best trending markets soon and I see a lot of opportunities there.
I thank you for the many compliments I have received, and most of all, for your loyalty.
My team and I WILL turn the track record around.
Best wishes, as always …
Larry
Position Trackers
Click here for your Supercycle Trader position tracker.
Click here for your Alternative Recommendations position tracker.
