Forex & commodities on February 27, 2018: outlook


Here are my discretionary thoughts on forex and commodities. I only trade the stock market.
Go to the homepage for my latest thoughts on forex and commodities.

Thoughts

  1. USD-S&P correlation is medium-long term bearish for the USD.
  2. Bullish price action for the U.S. Dollar.
  3. Gold supply: a long term bullish factor for precious metals.

2 pm: USD-S&P 500 correlation is medium-long term bearish for the USD
There is a clear inverse correlation between the USD and S&P 500 right now. The U.S. stock market is falling today while the U.S. Dollar Index is going up.

The stock market faces short term weakness, but its medium-long term outlook is decisively bullish. This means that the USD’s recent uptrend is merely a bounce/rally in a bear market and not the start of a new USD bull market. This bounce is the USD’s way of washing out oversold momentum (RSI) before heading lower in the medium-long term.
Here’s the U.S. Dollar Index’s weekly bar chart.

3 am: Bullish price action for the U.S. Dollar
There are small signs of bullish price action for the U.S. Dollar. There is a clear inverse correlation between the USD Index and the S&P 500 right now.

The S&P 500 went up significantly over the past few days, but the USD Index barely went down. If the S&P 500 makes a pullback, then the USD Index will bounce higher. This is a short term bullish factor for the U.S. Dollar.
3 am: Gold supply: a long term bullish factor for precious metals.
The global supply of gold is expected to peak in 2021. This is a small long term bullish factor for gold (and silver, because silver and gold move in sync).

This is not a huge bullish factor. Gold’s speculative demand is far greater than its industrial demand or supply. Gold’s demand primarily comes from speculators, long term investors, and central banks.
Read Forex & commodities on February 23, 2018.

Bottom line

I only trade stocks. These are just my thoughts/outlook on other markets.

  1. Gold and silver will break above their tight range in the first half of 2018.
  2. I’ve decided to buy some gold and silver as long term investments.
  3. The U.S. Dollar is in a bear market.

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