There are several things to keep in mind this week as we are trading which will have some impact on decisions we make. I am going to start out with the Dollar. Tonight the dollar has broken the intermediate cycle trend line to form a failed intermediate cycle. This tells us the dollar is in a yearly cycle decline.
This was only week 12 for the intermediate cycle, so we could still see the dollar trend lower over the next 3-10 weeks before it finally reaches its intermediate cycle low. This could have enormous consequences for our stock and soon to be metals trades.
Breaking below the previous intermediate cycle low could potentially trigger a bloodbath phase. Weakness in the dollar is good for stocks and commodities. This drop should help halt the blood bath happening right now in gold and silver and create a buying opportunity. Metals blood baths typically last 5-7 days and today is day 4, so I think we see gold bottom any day, probably in the 1700-1750 range and silver near the 200 DMA around 20.50 level sometime this week. We will likely be buying gold and silver later this week and Platinum as soon as tomorrow.
Once the dollar bottoms, it will likely coincide with a short term peak in commodities near the 168 resistance level on the CRB index some time maybe in January or February.
So to summarize, my expectation is that we will see the dollar drop into an intermediate cycle low over the next 3 to 10 weeks. This will help the stock market continue higher and will help usher in a new intermediate cycle with gold. These will be the areas where we will focus our trading.
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