Other markets on May 17, 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. U.S. Dollar’s rally is limited because interest rates are increasingly overbought.
  2. Oil and interest rates have limited medium term upside.

5 am: The U.S. Dollar is rallying because interest rate differentials are widening.
Money Flow determines a currency’s medium-long term direction. The U.S. Dollar is rallying right now because U.S. interest rates are rising relative to most major developed countries’ yields.

But the USD’s rally will be limited. Look at how overbought the 10 year Treasury yield’s weekly RSI is. If the 10 year Treasury yield’s rally is limited, then the USD Index’s rally will be limited as well.

5 am: Oil and interest rates have limited medium term upside.
Oil and the 10 year Treasury yield have a very strong positive correlation right now. Here’s the 42 day correlation (2 months).

With that being said, both oil and rates have limited upside (I think WTI’s resistance is at $75).
Here’s oil’s weekly RSI. It’s not extremely overbought right now, but will be once oil reaches $75-$80.

Read Other markets on May 16, 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.

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