Oct 18, 2012

Today was the day we have been looking forward to for a week or so. The Dollar has put in it's swing low signaling a reversal. Today's action closed higher than the intra-day high of yesterday.. thus signaling the reverse in sentiment and it's buying strength. Our next important point to look forward to is back towards the $80 level where the dollar should meet it's multi month downward trend which was set back in August. This should provide enough resistance needed to continue this multi month slide.

Here's a longer term view of the Dollar. Notice that now we've had the 50 MA cross the 200 MA. Also take note of the massive head and shoulders pattern in play.

Stocks weakened today. I fully expected another day or two of upside, but the reversal in the dollar signaled some selling. It's hard to see on this chart, but a big red candle was charted for the day. Indicators are showing weakness. This is a chance for a short term "short" on the S&P before we head to higher highs and eventually landing near $1550 in the spring.

There's not much to add today for silver. Just like stocks, it sold itself a bit short of resistance and put in a swing high today reversing the trend. Next we wait for a bottom. The 38.2 retracement should be good support right around $32 or just under.

Oil seems to be in a sideways consolidation pattern. It is being held below the 50 MA. In this consolidation, we've formed a rough, but obvious inverse head and shoulders. Once we break the trendline and blow the 50 MA, oil should move upward quite explosively. Also notice from the last time I updated oil, I pointed out that the MACD was about to give a buy signal. It has since crossed and more buying should come into play soon, especially once the dollar weakens again.

GDX put in a very aggressive swing high today. The price really dropped. I would love nothing more than to see GDX drop to the 200 MA and give us a buy opportunity around $48. However, the 50 MA could provide support and turnaround right at $50. Either way, I am very big on miners because of how beat down they were after gold and silver's major decline last year. The prices in miners are very cheap in contrast to where they were before the long correction period. This leads me to believe they have a lot of making up to do. With general equities rallying over the next few month as well as gold, these miners should really move. I will be a buyer whenever we confirm a low.

Conclusion - The Dollar should find a top in the next 7-10 days. I really don't see it rallying anymore than that because of the strong multi month resistance. This should push metals and stocks down into weekly lows.. which I expect all to rally out very strongly.