Other markets on May 14, 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. The smart money is still very bullish on the U.S. Dollar after the USD’s breakout. The dumb money is still very bearish.
  2. Prepare for a big gold and silver rally (mostly silver) once the USD’s rally ends.
  3. Bitcoin remains stuck in a bear market. No “higher highs” so far.

1 am: The smart money is still very bullish on the U.S. Dollar after the USD’s breakout. The dumb money is still very bearish.
The U.S. Dollar Index swung sideways from February to mid-April while smart money Commercial Hedgers became very bullish on the USD.

And even though the USD has broken out above its resistance, the smart money hasn’t become any less bullish on the USD. They are holding onto their USD long positions for an even bigger rally. My target is 94 on the USD Index.
This chart shows how the smart money (commercial hedgers) are still very bullish on the USD while the dumb money (speculators) are still very bearish on the USD. Smart $ = blue, dumb $ = red.

1 am: Prepare for a big gold and silver rally (mostly silver) once the USD’s rally ends.
Gold and silver are being kept range-bound by the USD’s rally (gold/silver and the USD have an inverse correlation right now).
But it’s clear that precious metals (silver in particular) will make a big rally once the USD’s rally ends. I think the USD’s rally has a few more weeks.

  1. As I explained on May 11, gold and silver’s price action are strong.
  2. The smart money remains very bullish on silver. They were right to be bullish on the USD (the USD eventually broke out above resistance in mid-April), so there’s no reason to believe that the smart money will be wrong on silver this time.

Here’s the smart money’s (commercial hedger) positioning on silver.

1 am: Bitcoin remains stuck in a bear market. No “higher highs” so far.
I previously said that Bitcoin could start a new bull market if it rallied above its $12k resistance and made a “higher high”.
*Bear markets make “lower highs”. Bull markets make “higher highs”.
That looks increasingly unlikely with Bitcoin falling right now. Bitcoin is still stuck in a bear market pattern of “lower highs and lower lows”. Bitcoin failed at the $10k resistance.

Read Other markets on May 11, 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. Troy,
    You said in the past you like to trade leveraged products. But for silver, you don’t recommend leveraged ETF in case you got the timing wrong. Time has passed and it seems you are very certain silver will rally now. Are you confident enough to recommend the leveraged silver ETF?

    • No. Silver is very volatile on its own. I use leveraged ETFs for the S&P because because the stock market on its own isn’t volatile enough

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