The US dollar did rally as stocks charged upward but so far the US dollar rally is a bit subdued! The decline also is very close to the previous “B” wave which doubles as a potential diagonal wave 2. Usually, it can even end up lower but never below any potential diagonal wave 2.
The commercials are still stacked to the bearish side by a ratio of 23:1 which can still force the US dollar to the downside. The media quotes the speculators and what they are doing but the hedge fund speculators always chase the markets and eventually, they get trapped and change directions in a panic.
The Euro is inverse to the USD as it’s inside the US dollar basket. It would be next to impossible for the Euro and the US dollar to soar at the same time.
I apologize to my readers as my postings are very sporadic and they will continue that way, until early 2020 or until I can find a new place I can afford.
An explosive move this morning in stocks was a near-vertical lift which never can be maintained for very long. Investors have to decide, keep loading up on stocks at the same time dumping gold. I have labeled this like a diagonal 5 wave sequence but it remains to be seen if another leg down is going to happen.
Gold went south while oil enjoyed a big rally. About all it tells us, is that investors are willing to dump gold stocks at a drop of a hat if they think stocks have seen a major bottom.
The Russell 2000 and the Midcaps do not confirm the SP500/Dow/Nasdaq so I think this is still part of a bearish rally.
The full moon is due on Thursday of this month and last night I could hear the coyotes howling under the power lines. Just kidding folks as moon cycles can trigger any type of a turning as I don’t see them being all that reliable anyway.
There is a gap below at the 2915 price level, so I’m sure that gap will get filled in the near future!
The bottom fell out of the gold price with a near-vertical drop that also left an open gap in its wake. Sudden drops like this happen as there are “No” daily trading limits in commodities.
The only question is how deep gold can still go as downward spikes like this can be a very bullish sign. Stocks/Oil exploded, but the gold and silver price headed south.
There should still be more upside, as the pattern so far, does not suggest a long gold price decline. Besides that, the $1600 price range is a much better resistance level than $1535 is.
The full moon is just a few days away so that can act as a reversal time period. Gold already recovered about $10 so that is also a good sign. I see it as a warning that later on when stocks start a real bull market that gold will decline as stocks supply the real competition for gold-related assets.
The 2011 gold peak is a prime example of what can happen.