I will do a post much later tonight. In the meantime, you can play the following at the beginning of every single market day until further notice in order to know what is coming.
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I've played GDX and GLD many, many times,in both directions, usually with good success. I covered big GDX and GLD shorts yesterday for nice profits. However…………
I've had "Gold is heading below $700" on the brain from STU for a little too long. They keep harping on it, but the simple fact is that the US Dollar is getting turned into toilet paper, and gold will tend to move the opposite direction. Earlier today I got into a big GLD long position, and if GLD can cross $99.33 and then, even more importantly, $100.44, this could be the start of a very powerful move higher.
Here is a chart of the relative performance of the dollar index versus gold (USD:GOLD). It kept declining for almost a year now.
The interesting thing about this chart is the RSI. It is currently in the oversold zone, meaning that the dollar is overweak versus gold.
The last time it happened was in last june, gold reversed and fell from 980 to 910 and the dollar made a small short term counter trend rally from 78.5 to 81.
What really matters is that the dollar is too weak now versus gold and the RSI is telling us that probabilities are high that the strength of these two assets against each other is about to change soon.
In order to take out the RSI from its oversold zone and change the relationship, only three things can happen now:
(i) gold declines but dollar consolidates
(ii) gold consolidates and dollar strengthens
(iii) gold declines and dollar strengthens
In all cases, probabilities are low that
(i) gold has a lot of upside potential
(ii) Dollar has a lot of downside potential
It is just another confirmation – through intermarket analysis- that an intermediate term bottom in the dollar is really about to be found soon.
Bottom line :
(i) Stocks are really near their top and reverse.
(ii) Bonds are going to rally
(iii) Euro is going to sell off
(iv) Yen is going to rally vs. both the dollar and euro.
(v) Gold and oil are going sideways or down ( I am tempted to say down)