USD, Gold and SP500 Trend Report
Source: Chris Vermeulen, TheOilAndGoldGuy (4/28/11)
"The dollar continues to control the equities and commodities markets."
Most of you know that I follow the dollar very closely. And each morning I provide my analysis with what I feel will take place throughout the session or next 48 hours.
In Wednesday's premarket trading analysis, I talked about the strength of the equities market in the past few sessions and that it looks as though it still has more power behind it.
Dollar Index—60-Minute Chart
Taking a look at the U.S. dollar, I noticed this morning that it was pointing to even lower prices and that it would likely happen today. It was only a few hours later that the dollar went into a freefall blowing through my downside price target of $73.30. It was this sharp drop in the dollar that sent stocks, silver and gold soaring higher yet again in our favor.
Equities Market—SPY 60-Minute Chart
Stepping back a couple hours before the U.S. dollar dropped in value sending stocks higher I did see fear creep into the market as traders started selling their shares and buying put options expecting the stock market to fall. When I saw this I got exciting because higher stock prices are usually just around the corner which they were! That's when I sent an update out subscribers noting we should see some fireworks very soon.
While I am bullish on the stocks and metals at the moment and am long in several positions, I am starting to see signs that a pullback is becoming more likely each trading session. This is when money management is important. I do not want to give back too much profit, but I must make sure we lock in some gains during times when the market is overbought like this.
We continue to ride the trend of higher stock and precious metal prices as the U.S. dollar spirals down out of control. Our SP500 positions are deep in the money and we continue to ride it for all it's worth raising our stops as we go.
The big question is if the sell-in-may-and-go-away sentiment will take shape or not. I'm thinking it will, and when the time is right, I will be looking to short the market.
If you are not yet getting my premarket chart analysis, be sure to join my trading service at http://www.thegoldandoilguy.com/free-preview.php.