Here are my discretionary thoughts on forex and commodities. I only trade the S&P 500.
Go to the homepage for my latest thoughts on forex and commodities.
- Gold & silver are weak relative to the U.S. dollar.
- The 10 year Treasury yield is at a big resistance.
- A positive correlation between Bitcoin and the USD. An inverse correlation between Bitcoin and gold.
4 pm: Gold & silver are weak relative to the USD
There is an inverse correlation between gold/silver and the USD right now. Gold and silver’s price action was weak vss the USD today. Gold and silver fell even though the USD fell!
Moreover, the gold:silver ratio has been going up. This is a medium term bearish sign for precious metals.
8 am: the 10 year Treasury yield is at a big resistance.
I agree with Jeff Gundlach and Bill Gross: bonds are in a bear market and interest rates are in a bull market. However, we need the market to confirm this hypothesis:
- The 10 year yield needs to break above its post-Trump election resistance.
- The 10 year yield needs to make a higher high and break above 3%.
The 10 year Treasury yield is currently at its post-Trump election breakout resistance.
Once the 10 year yield breaks above 3%, the bull market in rates & bear market in bonds is confirmed. We need to see rates make higher highs before we can confirm a bull market in rates. (Remember: bull markets make higher highs while bear markets make lower highs).
8 am: correlations between Bitcoin, the USD, and gold/silver
There is now a positive correlation between Bitcoin and the U.S. dollar.
There is also an inverse correlation between Bitcoin and gold (the USD and gold have an inverse correlation). Here’s a chart with Bitcoin and gold. Gold is inverted on the chart.
The U.S. dollar is in a bear market and gold is in a bull market. Based on this correlation, it means that Bitcoin will enter into a bear market very soon.
However, this correlation does not exclude the possibility that:
- Bitcoin will have 1 more leg higher…
- While the U.S. dollar makes a bear market bounce…
- And gold/silver make a bull market pullback.
Read Forex & commodities on January 17, 2018
I only trade stocks. These are just my thoughts/outlook on other markets.
- Gold and silver will break above their tight range in the first half of 2018.
- The USD Index will crater below its final support (90-91) in the first half of 2018.
- The best traders I know are still bullish on Bitcoin in the short and long term. I don’t know when the crypto bubble will end.