Look for a pullback, then explosive rally. Here’s why
FX:
The dollar is rallying in “wave i of 3 of C.” We think there
is a good chance that “wave i” is complete and a “wave ii” pullback is due
before the explosive “wave iii of 3” kicks in. This breakout would occur just as
the dollar index is attempting to break out above the key 38.2% Fibonacci Fan
line this morning at 89.20, which would have highly bullish implications. Our
wave count suggests we are in “wave 3” from the 86 lows to target at least 92 in
the coming weeks, so the two technical signals appear to be confirming each
other. We have a report coming out today on the updated outlook.
Meanwhile, a move above $463 in spot gold today would create a
bullish daily reversal. Our most conservative count on gold sees the correction
from $475 (spot) as a “wave 4” with “wave 5” towards $480 (minimum) to go.
Stocks:
We called for a rally from 1,205 to 1,220 last week so
yesterday’s move to 1,221 and the subsequent decline counts as complete. With
little fuel left and foreign markets continuing to outperform, our bearish
stance on the US markets since the March highs holds firm. But it will take a
move below 1,205 this week to see a technical breach.
Bonds:
No change: The 10-year note has rallied to 4.3% today. But as
we have said for months, only a move above 4.6% would be bearish for the 10-year
note.
Regards,
Jes Black
FX Money Trends
613 4th St Suite 505
Hoboken, NJ 07030
Tel: 646.229.5401
Jes
Black is the fund manager at Black Flag Capital Partners and Chairman of
the firm’s Investment Committee, which oversees research, investment and
trading strategies. You can find out more about Jes at
BlackFlagForex.com.
Prior
to organizing the hedge fund he was hired by MG Financial Group to help
run their flagship news and analysis department,
Forexnews.com. After four
years as a senior currency strategist he went on to found
FxMoneyTrends.com – a research firm catering to professional traders.
Jes
Black’s opinions are often featured in the Wall Street Journal, Barrons,
Financial Times and Reuters. He has also written numerous strategy pieces
for Futures magazine and regularly attends industry conferences to speak
about the currency markets.