The dollar remains in a long-term uptrend. However, short-term it has taken a hit as of late, nothing more than a pullback, as you can see from this chart. The uptrend is steady, and the pullback nothing more than a re-test of the lower rising trendline.
Nevertheless, the decline in the dollar has upset the EUO position, having hit my recommended protective sell stop yesterday at $24.33. You should now be out of EUO.
This has also clearly been bad for the EUO call options. In particular, the February $28 calls are virtually worthless. So there is no sense trying to exit them at this point. Let them run, and if they do rise a bit, I will seek to salvage some value.
The longer-dated January 2017 $28 EUO calls are also underwater, but HOLD. Longer-term there is not one shred of doubt in my mind that the euro is going to plunge well below 1.00 to the U.S. dollar, sending these call options soaring.
The good news: Gold and silver continue to run higher, with gold reaching $1,157.90 this morning (April futures) and silver $14.93 (March futures). As I pen this issue, UGLD and USLV are up roughly 20 percent and 25 percent, respectively.
Hold UGLD and USLV. I expect still higher prices in gold and silver, with the next level of resistance to be tested at the $1,187 level in gold.
Oil had a nice run higher yesterday and is pulling back a tad today. My models remain bullish. Oil is simply consolidating its recent gains right now, gathering momentum for a move to the $39 level in the days ahead.
Hold UWTI and all oil call options.
The stock market is acting like a game of hot potato. No one seems to want to hold stocks for more than a day. That’s typical as a bear market takes root. My models continue to strongly suggest stocks are headed nowhere but down heading into late March, early April. Hold UVXY with your stop in place at $33.58, good till cancelled.
Fundamentally, nothing has changed. Deflation still has the upper hand around the globe, mostly in the public sector (government) but also in the private sector as investors hoard money.
Currency markets are gyrating as fundamental-based investors and traders try to figure out central bankers’ next moves, which is a fool’s game. Central bankers control nothing, and trying to trade or invest based on what they may or may not do, say or may not say, is simply foolish.
You are on the right side of the metals, oil and the stock markets. Your potential gains there should soon more than offset the losses on the euro.
Moreover, once I see the dollar correction bottoming, I will most likely recommend going long the dollar again and short the euro.
Lastly, the India Fund ETF (IFN) continues to firm up nicely, trading at $21.33 as I pen this issue. If not on board, using 5 percent of your trading funds, you may purchase IFN now. Be sure to place a good-till-cancelled protective sell stop at $18.43.
Stay tuned!
Best wishes,
Larry
Position Tracker
Click here for your position tracker.
