The dollar seems to have thrown under an ending diagonal and then broke back up into the channel. Now it is threatening to break out of the top rail. Of course, this will likely require a 3rd wave to occur and we are not quite there yet but by Tues of next week the 3rd wave should have started and it will likely announce its presence by a gap up. This means that world turmoil of some kind, perhaps Ukraine related, perhaps Japan related (bug in search of a windshield as John Mauldin likes to say) or perhaps it is the EU that comes under fire again/more threats of PIIGS defaults, rising bond prices, etc. There is no telling what exactly it will be but the charts are strongly suggesting that some kind of bad news is just a few days away and people will run into the dollar as a safe haven as a result.
A stronger dollar will bring weaker stock prices and possibly weaker metals prices as well. At some point gold will be considered a safe haven again, but probably when there is a dollar crisis and no place else for investors to turn. Until then another wave down in the metals and miners cannot be ruled out. TVIX or one of the ultrashort market ETFs are probably the safer plays right now given the circumstances. Our very best scenario for trading metals and miners is for one more washout wave in them along with the broader markets but then while the broader markets continue to decline we see M+M bottom and then go up. In other words, negative divergence between the two.
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