The U.S. Dollar Index (USD) popped higher yesterday.
It wasn’t a big move – just a 0.7% gain. But it was enough of a move to create a really bullish setup on the chart – just in time for the Federal Open Market Committee (FOMC) announcement on interest rates this afternoon.
Take a look…
The dollar appears to be on the verge of breaking out to the upside of an ascending triangle pattern. Notice also how the 9-day exponential moving average (the thin red line) is on the verge of crossing above the 50-day moving average (the thin blue line). This “bullish cross” often occurs at the end of an intermediate-term downtrend and at the beginning of an intermediate-term uptrend.
This is a bullish setup for the dollar. All it needs is a catalyst for the breakout. And that catalyst may come from the FOMC when it announces another interest rate hike this afternoon.
If the dollar does indeed break out to the upside, then it should make a quick trip up towards the 92 level. And that sort of move in the dollar is going to put pressure on the price of gold.
Remember, last Friday I wrote about the precarious short-term look of the gold chart. Gold was in a descending triangle formation… A breakdown from which would lead to a quick drop towards the $1,290 level.
So it’s really no surprise that the dollar chart has the opposite look. Gold and the dollar often run in opposite directions.
It is convenient, though – and maybe fodder for the conspiracy theorists – that the charts of gold and the dollar are projecting volatile moves just as the new head of the FOMC is gearing up to make his first announcement.
Gold and currency traders should prepare for some fireworks this afternoon.
Best regards and good trading,
Jeff Clark
Reader Mailbag
Today, a big, mixed mailbag…
On Monday, March 12th, you stated the market might correct and aggressive traders might look for a pullback in the S&P. I purchased QID calls at $0.40 (I prefer the NASDAQ). It immediately went against me as the rest of Friday and the following Monday the market moved up. However, the rest of the week it started moving in my favor. Yesterday, I was able to sell for $0.80. I made a quick 4K in 6 trading days. Thanks for the help.
– David
Dear Jeff, I have followed you for years at your previous publisher as well as with a lifetime subscription now. Your integrity and wisdom is clear in the fact you focus on “identifying” and recommending a “profitable” trade and not focused on pleasing unsophisticated subscribers who are only interested in getting a large number of trades from you.
The wise person always wants “Quality” rather than “Quantity” and normally you don’t get one with the other. You said it well: “I’d rather lose subscribers for not making them as much money as they thought they should make… than lose subscribers from losing them money”. Frankly, I do not care if you don’t find a compelling trade for weeks. Being “disciplined” and “Patient” eventually results in doing well for yourself and your clients. Wishing you many more years of doing your best to help your subscribers.
– Mitchell
Thanks for your e-mails. I love them! I am a purely technical trader who learned the hard way trading indices futures while living in London way back in 2004. After wiping out twice and being forced back onto the horse by a very supportive partner at that time (now wife), I created a methodology of my own that helped me very successfully trade the ES and YM, but living in Australia meant sleeping all day and trading by night, and not even my hyper-understanding wife could tolerate that.
Got myself a great job, it just doesn’t pay like my futures trading did! I miss it. Then I subscribed to your emails. Your emails speak my language. I love technical analysis and trading with pros. With multiple business interests and a young family it is difficult to allocate time to keep eyes on the markets regularly enough to yield the results I want. Thanks for taking the time to read this.
– Anthony
Jeff, I have not achieved all the results you have tracked, but your work and efforts are exemplary. Just so you know, I haven’t executed a single uncovered put trade. (My bad.) Also, I pushed (increased) my play on your gold trades; even buying calls instead of shorting puts and with poorer results than you achieved. (My fault.)
Although, it nags at me the “they” keep their thumb on gold thereby preventing the possible upside moves your charts suggest. Maybe I am just a conspiracy guy. The only other thing I notice: it is really difficult to hit your entry/exit points sometimes. But that is not really on you. I am happy getting 80% of what you might print! Anyway, you are doing great. Your advice is well thought-out and your timing is incredible. I really appreciate your hard work, look forward to your ideas, and expect to have a rewarding 2018 with you. Thank you big league.
– Bill
Hey Jeff, I love the blog. I’ve never had a similar service; this is my first one and hopefully my only one as well. With getting text alerts, I don’t get the returns you do, but I’m happy with them. The entry price you use and the “you can pay up to” price are a little different, and my fills always seem to be closer to the latter. I’m glad to be able to say I’ve never paid more. Chasing a trade is not much of a temptation for me.
I know you can’t consider commissions, because they’re all over the map, and commissions don’t eat into the profits of large traders to the extent that they eat into someone trading a small number of contracts. Mine is a small account. I trade exclusively in a retirement account (All my money outside that account comprises my emergency fund, which I won’t expose to the market), so I have to do cash-secured naked puts instead of being able to trade them on margin. Therefore, I get a fourth or fifth the rate of return that you do. My exit prices are usually something less than your recommended exit price. Maybe, my server or phone doesn’t get me the alert as quickly as for some others. So, my returns can sometimes be a fraction of what you record. My return on the GE calls was particularly small – only 2.7% while yours was 25%. Hopefully, I get a bigger fraction on most of the others.
Nevertheless, with your massive annualized returns, if I only get 10% of what you get, it will still be better than 90% of the services to which I’ve subscribed over the last 17 years. I actually lost money on most of those. Unlike some of your subscribers, I do recognize all the work you do on our behalf, and although some would say your service is expensive, I’d say for the service you provide, it’s a bargain. Thanks!
– Paul
I’m a subscriber to your Market Minute but not your investment service. I just wanted to comment on your response to a disgruntled Mark. Well rebuked. You have great reservation.
– Edward
Jeff, don’t change a thing. I been following your work for several years; I do about 20% of your trades. I love your approach to high-probability, low-risk trading by means of put sales when the premiums are high and speculative options purchases when premiums are low.
Your work ethic is unmatched, and the analysis is so attractive that I would subscribe if you never made another recommendation. I am a much better trader thanks to you. My money management (allocation) is sounder now than ever before. I have struggled with over-betting. Thanks for a great service. My best trade was in Walmart calls you recommended about 3 years ago, I made 400% in 3 days – $5,000 turned into $25,000 in 3 or 4 days.
– Dale
This week could have hardly started worse. This is terrible advice! You are sometimes right, but if you are wrong the damage is heavy. I remember that you advised a long position 6 weeks ago. The stock exchanges responded with a record breaking fast decline of 8%. Stop with this, because this is not a recommendation to subscribe to your services, or worse, it is making a fool of you. If you really want to continue with it, then at least mention always a clear stop loss. Anyhow, I tried your recommendations and it has cost me a lot of money, even with small positions. This is money I could have used for other purposes.
– Reijer
Jeff, thank you for confirming my (amateur) suspicions that no trade is the best trade right now. From the news, trends, and market action Monday I suspected that this would be a good sidelines week.
– Fred
Hey Jeff, I love everything you put out. Food for thought – possibly the market has a direction (that we don’t yet see clearly) it just hasn’t telegraphed its direction to us.
– John
This is why I searched to find you again. I cannot afford your letter, but I recognize wisdom when I see it. By combining your technical wisdom with Dan Celia’s behavioral economics wisdom, I have been quite successful. Wish I had the money to make big money, I’d buy your letter in a heartbeat. Still happy with the free stuff. Thanks.
you very much for this email and of course all your letters online. Even though I don’t have the funds to get involved just yet, I will hopefully get cranking sometime soon. Just from an outside look (not as a trader yet) your advice and recommendations seems to me to be sensational! I too realize that you cannot pick all winners – as if trying to pick a winning race horse. However, your advice and expertise gives us all a far better bet than punters could possible hope for. Well done again, Jeff, and keep up the good work. I mean it sincerely. Best regards.
– Jim
As a subscriber, if Jeff spent as much time explaining and justifying why he didn’t make trades as he did making profitable trading calls he could be making tremendous amounts of money for subscribers. For example, we have a massive spike in volume and major indices – 2-3% depending on what you track and Jeff has spent all of his energy over past few weeks explaining why he missed trades or didn’t trade at all. Massive correction, massive volume and Jeff is sitting on his hands waiting for a re-test of lows to deploy cash, that’s not very original thinking or advice in my humble opinion.
– Steve
Jeff if people want to bail it is because they don’t understand the concept of sitting on your hands till there is money laying over in the corner and you walk over and pick it up. They want action and excitement when the reality is trading properly is like watching paint dry boring as hell but it pays the bills. I’ve paid for every single day of my life in cash for the last 48 years, thank you very much.
– Charles
As always, thank you for sending in your thoughts, questions, and stories. Please keep them coming right here.