Three New Trades, For All Members …

Good morning! We have a lot of ground to cover today, including three new trades. So let’s get right to it. First, a market update …

The stock market: In yesterday afternoon’s session, the market managed to rally back a tad, eliminating the outside reversal day that I mentioned in my update issue yesterday morning.

This likely means that the Dow Industrials and the S&P 500 should move a tad higher before topping, with the Dow having major resistance at 17,070.

Nevertheless, all of my indicators strongly suggest that the U.S. equity markets will turn sharply lower soon and collapse through the August lows.

Therefore, I recommend that all members hold their existing bearish ETFs, which includes UVXY and QID. Keep your protective sell stops in place at $34.10 and $31.71, respectively.

If, for whatever reason, you do not own UVXY and QID you may still purchase them at the market, allocating 5% of your trading funds to each position. Place good-till-cancelled protective sell stops at $34.10 and $31.71, respectively.

Meanwhile, the dollar continues to trade sideways. But it is merely priming itself for a very strong rally. Conversely, the euro is doing the same, preparing for a major collapse.

Hold your shares in UUP and either EUO or the January 2016 EUO call options with a strike price of $25.

In a moment, I will be recommending that all members add to these positions. The reason being the next rally in the dollar – and decline in the euro – are going to be doozies and you want to capitalize on them fully. (If you do not own EUO or its call options, see trade section below).

Gold is likewise biding a little time here, testing support levels. But it remains poised for yet another rally. Therefore, hold your shares in UGLD with a good-till-cancelled protective sell stop in place at $8.22.

If – for whatever reason – you do not yet own shares in UGLD you may purchase them now at the market using 5% of your trading funds and placing a good-till-cancelled protective sell stop at $8.22.

Yesterday you should have been able to purchase shares in USO at roughly $15.78. Hold with a good-till-cancelled protective sell stop in place at $13.34.

If you do not own shares in USO, you may purchase now at the market using 5% of your trading funds. Place a protective sell stop, good till cancelled, at $13.34.

Now, to my new recommendations for today.

As I noted earlier, the next leg up in the U.S. dollar – and conversely, the next decline in the euro – will be doozies. So too will the coming decline in the Japanese yen.

Therefore, I am recommending all members take the following action:

A. Purchase call options on the PowerShares DB US Dollar Bull ETF, symbol UUP.

B. Purchase additional call options on ProShares UltraShort Euro ETF, symbol EUO. And …

C. Purchase put options on the CurrencyShares Japanese yen trust ETF, symbol FXY.

If you are not trading options, for whatever reason, you may purchase additional shares in UUP and EUO instead. For the Japanese yen you may purchase shares in ProShares UltraShort Yen (YCS). Full details can be found in the table below.

Note that for the call options on UUP and the put options on FXY I have recommended March 2016 options. This gives you plenty of time to capitalize on a very strong dollar rally and decline in the Japanese yen.

For the call options on the ProShares UltraShort Euro ETF (EUO) I recommend the January 2016 call options, strike price $25, the same call options many of you already own.

The reason is simple: The decline I see in the euro will occur more quickly than the decline I expect in the Japanese yen … while the U.S. dollar should see its advance continue longer. Hence, the different option maturities.

We have many new members who have joined recently. So in the trade table below I give very detailed instructions. Please follow them according to what you may or may not own in your existing portfolio.

Keep in mind that the euro is on the cusp of a major decline. We are now in the phase of the sovereign debt crisis where Europe’s collapse should start accelerating.

Indeed, the situation in Europe is getting worse by the day. Germany’s industrial production slumped in its most recent quarter, catching almost everyone off-guard.

In addition, Deutsche Bank, Germany’s largest bank and the largest bank in the European Union, is set to announce a whopping $7 billion quarterly loss.

On top of that, the Volkswagen disaster is going to cripple not only Germany’s economy, but also virtually all of Europe. Volkswagen is the largest employer in Europe, with 270,000 employees. The fines against the company could be as high as EUR38 billion or more than $40 billion.

And then there is the refugee crisis which is going to slam Europe’s economy, especially as we head into the winter months, where food and shelter are that much more expensive to provide.

Clearly, these factors are all combining to break the back of Europe’s massively indebted economy. It will be reflected not only in Europe’s stock markets, but more so in the euro currency which is so fragile to begin with. It won’t survive the coming crisis.

As to Europe’s stock markets, I will soon re-recommend the inverse ETF EPV, but wait for my signals.

Now, to the trade table. Please act on the appropriate recommendations below, according to your portfolio, and what positions you may or may not own. Note the table below relates only to the new trades and not to positions mentioned previously that you may or may not own.

Go ahead and act on these recommendations as soon as possible, but do not chase the markets, stick with my recommended limit prices. If anything needs to be changed, I’ll let you know pronto.

Best wishes,

Larry