A Gold Bottom But Will the U.S. Dollar Cooperate?

Gold, and by extension the SPDR Gold Shares (GLD), has had a rough year. However, based on a historic flip in speculative positioning in gold futures, a bottom is likely in for GLD. According to the tweet and chart below, the net speculative positioning in gold recently went net negative for the first time in … Read more

Above the 40 (August 15, 2018) – A Still Shaky But Now Stretched Stock Market

AT40 = 47.0% of stocks are trading above their respective 40-day moving averages (DMAs) AT200 = 53.0% of stocks are trading above their respective 200DMAs VIX = 14.6 Short-term Trading Call: neutral Commentary I typically consider the market stretched to the downside when AT40 (T2108), the percentage of stocks trading above their respective 40-day moving … Read more

Forex Critical: Mexican Peso Weakens As Traders Bail on Emerging Market Risks

In my post reviewing the strength in the U.S. dollar index (DXY), I neglected to note a related weakening in the Mexican peso. On Friday, USD/MXN rallied into its 200-day moving average (DMA) and faded. Per my plan, I faded USD/MXN at the 200DMA. Much to my surprise, USD/MXN readily backed off 200DMA resistance. I … Read more

Above the 40 (August 10, 2018) – Facing Fresh Macro Challenges and Lacking Technical Confirmations, the S&P 500 Stalls Under All-Time Highs

AT40 = 51.6% of stocks are trading above their respective 40-day moving averages (DMAs) AT200 = 55.3% of stocks are trading above their respective 200DMAs VIX = 13.2 Short-term Trading Call: neutral Commentary The indicators barely changed from the last Above the 40 post, but the technical winds are likely changing yet again. A little … Read more

The U.S. Dollar Idles While Rate Hike Odds and Trade Pressures Creep Higher

I am riding the long U.S. dollar index (DXY) trade based on two simple drivers: 1) a U.S. Federal Reserve pacing for four rate hikes in 2018, and 2) an expanding trade war, especially against China, which on balance will create more demand for U.S. dollars especially relative to those currencies who stand to lose … Read more

Above the 40 (June 13, 2018) – A Fed Buzzkill Ends Ambitions for An Overbought Market

AT40 = 66.1% of stocks are trading above their respective 40-day moving averages (DMAs) (ended 1-day overbought) AT200 = 55.5% of stocks are trading above their respective 200DMAs (a 4-month high) VIX = 12.9 Short-term Trading Call: bearish Commentary Flipping short-term bullish was fun while it lasted…all of two days. The Federal Reserve hiked interest … Read more

A Path Higher for the U.S. Dollar: A Shrinking Trade Deficit

It is increasingly clear that President Trump and his administration will relentlessly pursue a goal of balanced trade with the rest of the world. Trump sees negative trade balances as an absolute bad, and his fiery political rhetoric highlights that positioning. If my interpretation is correct, then I want to stay net long the U.S. … Read more

A Rush for Safety Slashes Odds for Fed Rate Hikes and Spikes Volatility

The odds of getting four total rate hikes from the Federal Reserve this year are about as low as ever now. Even the odds for just 3 total rate hikes for 2018 are ominously converging upon 50/50. Source: CME FedWatch The chart above shows a 14.8% chance that rates will get to at least the … Read more

U.S. Dollar Holds Firm Despite Sharp Pullback in Fed Rate Hike Odds

A little over two weeks ago, I was just starting to concede that the likelihood of four Fed rate hikes in 2018 was trending in favor of the hawks. Last week, the rate on the 10-year U.S. Treasury fell back sharply and ended the week below the magic tripwire of 3.0% (starting Thursday). In parallel, … Read more

Four Fed Rate Hikes This Year? Hmm….Maybe.

To-date, I have been extremely skeptical of the meme of four rate hikes in 2018. I thought that Thursday’s “weaker than expected” increase in the April consumer price index (CPI) would further confirm my skepticism. Instead, I discovered that the 30-day Fed Fund Futures are pricing in a 47.4% chance of a fourth rate hike … Read more