Other markets on May 25, 2018: outlook


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

Thoughts

  1. Jeff Gundlach agrees that the U.S. Dollar will go down. This is just a bear market rally for the USD
  2. U.S. economy continues to outperform the European economy. A medium term bearish factor for the Euro
  3. Jeff Gundlach thinks that oil will go to $90. I disagree.

3 am: Jeff Gundlach agrees that the U.S. Dollar will go down.
In his latest webcast, bond king Jeff Gundlach thinks that the U.S. Dollar will go down. He thinks that the U.S. Dollar’s recent rally is merely a bear market rally, and that the USD Index’s rally will stall here at the 94-95 resistance. I agree.

3 am: U.S. economy continues to outperform the European economy. A medium term bearish factor for the Euro
This chart demonstrates that the EU-U.S. PMI difference tends to lead the EURUSD. The EU’s PMI continues to underperform the U.S.’ PMI. This is a medium term bearish factor for the EURUSD, which goes against my medium term bullish case for the EURUSD.

I think the EURUSD will make a short term bounce and the USD Index will make a short term pullback. Then I will reconsider my medium term case for the U.S. Dollar and Euro.
3 am: Jeff Gundlach thinks that oil will go to $90. I disagree.
Jeff Gundlach thinks that WTI oil will reach $90 a barrel. His rationale centers around oil’s correlation with the U.S. Dollar:
“The dollar’s rallied and yet oil is at a multi-year high,” Gundlach said. “That shows you oil is really strong, rallying along with the dollar. I do not see the dollar’s strength continuing.”
I disagree with Jeff Gundlach’s reasoning. The long term correlation between the U.S. Dollar and oil is extremely random. The 2 do not have a consistently inverse correlation. This chart demonstrates the 20 weekly moving average between oil and the U.S. Dollar. Notice how it’s extremely random.

A decline in the U.S. dollar does not mean that oil will rally.
Read Other markets on May 24, 2018: outlook

Bottom line

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

  1. Gold and silver are in bull markets.
  2. I’ve decided to buy some gold and silver as long term investments.
  3. The U.S. Dollar is in a bear market.

2 comments add yours

  1. This is very clear now with the EurUsd chart… the lead time seems to be a few weeks so do you think it will take a few weeks for the EUR bounce

    • Looks like it. Flat USD top (flat EUR bottom) here, then Euro bounce in a few weeks.

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