i think the discussion should start with the US dollar, oil and SLW yesterday. I'll save the best for last.
The US dollar index has been in an ebb and flow upward since 9/14. on it's latest move up, my analysis gave 79.942 as the high. It managed to pop it's head above that to 80.040. That is a pretty big move of 98 pips -essentially. Some people try to get 3-8 pips a day and that can equate to multiples of roughly $5000++ depending on your leverage and account size. The point is 98 pips would represent some folks having made roughly $100,000+ on a single trade.
The fact that the dollar went that high sets it up as bullish and I have 79.46 as the ultimate reaction low for it. Plot the dollar index against the 50 day MA and you'll see something interesting, it shows a base at 79.42. plot the 200 day, and you get a sense of where it might go back to because old rules say ultimately, everything goes back to that at some point. My target on it is now back up to 80.04 then onto 80.62.
SLW shouldn't have broken down as much as it did yesterday before bouncing, it broke down a lot. It's also leaving gaps on the chart at this lofty height, which isn't healthy for it to move upward, since those gaps represents pools of liquidity that pull the current price like a magnet. Finally, there was some volume on the silver futures prices but not what you'd expect. From Jan to mid aug, all you had to do is watch for positive volume on a 5 min chart of a certain amount to know that if you got long, there was a 80% chance you were going to make money. After Aug 22, many multiples of the previous volume were needed. roughly $130 million used to be needed to move the silver futures, but now $500 million in leveraged money required to do the same heavy lifting. Yesterday, there were, I'll admit, quite a few $13o million buys contract buys but it wasn't compelling.
THE BEST, your USA elections. I don't think it's likely the plunge protection team will let the US dollar fall from here because that would mean sky rocketing prices of silver, gold, gas and all other commodities when folks are headed into the election booths. I think strength of the dollar occurs around election time to give the sense of stability. But hey, what do I know, I'm canadiano
the dollar has gone from 79.42 to 80.00 in minutes. 58 point move. you wouldn't believe me if I told you how much i just made on that trade. My silver short worked too, closed it to 34.46. I can take the rest of the year off..lol. my third trade to try and short silver again, isn't working out the way i wanted because silver seems to be fighting falling against the dollar move up but it doesn't matter compared to my dollar trade.
Surprised how well slw did against a rising dollar,also most of the other pm's.
Then when we hit the bogey at 39.98 ,the whole mess headed south,XAU HUI GLD GDX, as if they were taking their cue from SLW.
Excellent post. And I (not that it matters) agree with most of it.
The "PPT" whomever they are at JPM, GS, SAN, ML do what they are instructed to do. They are NOT asmost think, restricted to any one instrument.
With that in mind, your argument about the dollar falling may be just the opposite.
They CAN manipulate the price of oil lower while allowing the dollar to weaken and thus allow other commodities and equities increase in value. In fact, it's easier for them to do that.
The one thing they fear is oil over $100. Even $95 gets dicybut that's where they step in.
Another problem is the Fed's proxiy traders at the aforementioned houses get something in return. Most of it is in the .25% differential in I rates for them. But the other is how they play the commodity and equity games.They are above the law,and we don't always know which side of the trade they are on.....well,most don't. Some do.
But yourpost was just about spot on, with a few tweaks needed, arguablyinconsequential to the overall flavor of the post.
for the dollar to rally means the market goes DOWN, that will not look good for Oblama or Bernanke....AND war, rumors of war are causing commodities to move higher Gold may trade WITH oil, and it has been doing just that!! I believe BOTH are a good play the dollar and PMs.........
a dollar rally of the type I'm projecting takes the market down maybe 4-8%, not a big deal. More importantly, prices at the pump look good and fund managers who never liked the rally and, stayed out, get a chance to buy in beginning of Oct. Now wouldn't it look nice if the dollar starts to fall every so slightly in 2nd or 3 rd week of Oct. That way, all of your 401 K's are going up because your fund managers were able to buy stocks for you, the price of oil has risen back to lower 90's and prices at the pumps are livable, and gold the thing that yells the world is ending isn't skyrocketing during the elections. hmmm, I've seen this movie somewhere before?