It’s times like these – sideways markets trading in tight but volatile ranges – that try the souls of traders and investors everywhere.
Most traders, always overly eager to trade, try to step in and out of these kinds of markets for very short-term profits. The typical end result of all their actions: Making their broker rich.
Then there are others who take on new long positions, thinking that it’s just a pause in existing trends, and that by adding to positions now, they’re setting themselves up for a home run. When in reality, many markets are actually getting ready to change trend, violently.
The hardest times for any trader or investor are ALWAYS periods like the recent months of sideways, go nowhere, tight but volatile market ranges. And almost always the best, most profitable course of action is not to push the markets, but to lie in wait, like a lion tracking and stalking its prey.
And so it is with me. I am lying in wait, stalking the best opportunities, ready to jump on them for you before you can bat an eye, to help you make oodles of money.
Money that can be kept and built on, not money made in a flash in the pan that can just as easily go up in smoke.
With all that in mind, let’s take a look at the major markets and what has transpired over the past week or so, starting with …
Gold: Last week, gold elected a sell signal by closing below $1,227.10. Since then gold has fallen to as low as $1,210 (basis June futures), only to bounce back to the $1,234.70 level as I pen this column (Tuesday, April 5 at 5:00 am EST).
A stinking $24 trading range, with no gusto, in a week’s time. No opportunities there, even for short-term traders. Maybe for day traders, but for overnight or position traders, nothing but noise.
Any changes in trend in gold? None whatsoever. Merely a sloppy, go nowhere mess. Worth sticking your neck out? Hardly.
The trend remains negative, with the next move likely to bring gold down to support at $1,202, then bust through that to the most important support level at the $1,180 to $1,160 level …
All of the above general comments equally apply to silver, platinum and palladium.
You have bearish positions in gold and silver. Hold those positions with any related stops in place and await my signals. These positions have terrific profit potential once gold and silver break down from the recent tight trading ranges.
Crude oil: Crude oil had an important pivot point at the $39.25 level basis the nearby futures. When below it, the trend, short-term would be bearish. When above, the trend, short-term would be bullish.
Oil has opted to correct more than I had expected, staying below $39.25, and moving down toward the lower end of the trading range that I cited last week at the $36 level.
Overhead resistance still stands at $39.25 naturally, followed by $42. Overall, oil is doing what my neural net models called for, a largely sideways correction that will lead to a new level up in the spring to the $50 level.
Oil appears to be basing now, just below that $36 level, so don’t be surprised if oil soon takes off to the upside. Hold your oil-related positions. The wait for the next leg up should pay off in spades.
Perhaps the most important market of all right now, and for the weeks and months to come …
The U.S. Dollar: The dollar, as measured by the Dollar Index, is largely caught in a trading range for now, but within the context of a long-term bull market. Short-term support can be found at 93.197 on the Dollar Index, followed by 91.257.
Resistance will be found at 96.955 and then the former highs just above the 101 level.
Nothing has changed there. Over the past week, the dollar has traded in an extremely tight trading range, chopping up traders left and right and spitting them out as wounded animals.
And that is just the opening act of another major move for the dollar that will destroy even more investors and traders who continue, for some odd reason, to listen to all the pundits coming out of the woodwork who are again screaming about the death of the dollar – one well-known analyst with alleged ties to the CIA shouting the loudest, an analyst who has NEVER been right about any market let alone the dollar.
If you want to avoid losing money, simply ignore these harum-scarum analysts who don’t have a clue about real economic history and the forces that drive them. Listening to them is the fastest way to the poorhouse.
There is NO way the U.S. dollar is back in a major bear market. It is, conversely, in a major bull market and is merely taking a pause. The next move up in the U.S. dollar is going to knock your socks off with the Dollar Index moving from its current roughly 94 level to well over 105.
Chief reason: Deflation and the demise of …
The euro: Since last week, the euro has managed to eke out a new, short-term range high at the 1.14385 level but there has been no change in trend to the upside. Just a short-term spike higher, the euro essentially catching its last breath of fresh air before rolling over and dying.
The new high at 1.14385 should prove formidable, while support remains under the market at 1.1030 followed by 1.08995. After that, support plunges to the 1.05 level, then 1.03 and then even lower.
The only thing holding the euro up, or should I say, suspending it in thin air, right now – is the fact that Janet Yellen has softened her tone on rate hikes here in the U.S.
But in the end, that won’t matter one bit. Yellen could lower rates here and the euro will still meet its maker: It was a flawed currency from the outset, and now, every threat under the sun is combining at the same time to exploit the currency’s fall and take it under.
Markets have no mercy and take no prisoners. The euro is destined for failure due to the ignorance of the leaders who put it together; their ignorance of history, their ignorance of economics, and perhaps most tragic of all, their ignorance of Europe and its many disparate cultures.
Dow Industrials: The key resistance figures for the Dow Industrials are still the 17,901 and 18,500 levels and …
Unless the Dow can get above both of those figures on a weekly closing basis, the bias toward the downside will remain the more probable path of direction.
Last week, the Dow hovered near the 17,900 level, but then started turning slightly lower. Major support still lies at the 16,652 and 14,687 levels.
Therefore, in the very short-term, the trading range is from 16,652 to 17,901. A sloppy, wide trading range.
Nevertheless, every indicator I maintain and every neural net and AI model I run on the major U.S. stock indices points to a rout that will take the Dow Industrials down to the 13,900 area.
Hold your bearish stock market position and related stop and remain patient.
New Trade:
Time to get short the euro. First, as you can see from this technical analysis chart of the cash euro, it has topped at the juncture of an upwardly sloped medial line and the top of a downward sloped median line, which is the euro’s main trend, based on many of my models.
Therefore, this is an ideal set up for a low risk short entry point to sell the euro.
My recommendation: Let’s do it two ways. A. With the inverse euro ETF, symbol EUO, and B. With call options on EUO to stoke up some additional leverage.
Details below:
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ALL Members: 1. Using 5 percent of your trading funds, buy ProShares UltraShort Euro, symbol EUO, at the market and place a good-till-cancelled protective sell stop at $21.16. 2. Using 2.5 percent of your trading funds, buy the August 19, 2016 ProShares UltraShort Euro call options, strike price $24.00, symbol EUO160819C00024000, at $0.90 or better, good till cancelled. |
Do not chase the market on the call option. If anything needs to be changed regarding the option order, I will immediately let you know.
Stay tuned and best wishes,
Larry
