Tuesday’s expected gap down and steady buyback created a LOT of amazing charts. Many stocks I have reviewed bounced with picture-perfect accuracy off key support levels like 50DMAs and 200DMAs. The chart of the dollar index also caught my attention (as it so often does). For the past two days, the U.S. dollar has clung to the long-term support line that so many are watching so closely. I would not have believed the grip of the technical traders if I could not see this for myself.
The red trendline below connects long-term support from the important bottom in 2008. (Click here to see the longer-term chart).
*Chart created using TeleChart:
As the dollar has continued to decline through this year’s crises and geo-political turmoil, it is clear that its role as a safety currency has died for now. I am not sure what would revive interest in the dollar at this point except massive rate hikes…and nothing even close is coming for a long, long time. So, while I continue to bet on one more bounce, I am preparing for the next big leg down in the dollar. To that end, I used today’s gap down to re-establish trading positions in Goldcorp (GG) and Pan American Silver (PAAS). Silver Wheaton (SLW) remains on the “to-do” list.
Be careful out there!
Full disclosure: long GG, PAAS, SLV; net long dollar