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Long Term Musings In January 2018
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Long Term Musings In January 2018

by The MoleJanuary 26, 2018

Everyone apparently hates the Dollar now and continues to cheer its slow but steady demise. In a little over a year we went from nearly par with the EUR/USD to an exchange rate of 1.25 and the pace appears to be increasing. I’m literally heading to the ATM every single day now stashing as much Euros as possible as they most likely will cost me a little more tomorrow. It’s almost starting to feel a bit like living in Argentina, except that nobody else seems to care. Not surprisingly almost everything else, equities and commodities in particular, have responded strongly. After equities, are we now heading for a bull market in commodities? Let’s review where we are on a long term basis:

I posted this chart yesterday but it bodes repeating as it drives most everything else. Now both President Trump and Secretary of the Treasurey Steven Mnuchin have made it clear that they want a weak Dollar favoring their efforts to reignite manufacturing and other types of industries in the United States. So it’s fair to say that we won’t hear much in terms of bullish sentiment concerning the greenback out of Washington anytime soon.

Push back, should it finally materialize, will most likely come courtesy of foreign central banks realizing that they are increasingly trading against the wind. In particular I’m looking at you Germany, Japan, and of course China. The latter may have a harder time openly confronting or counteracting a weak Dollar policy but although Draghi is currently feigning utter lack of concern he did suggest earlier today that we most likely won’t be seeing any interest rate hikes by the ECB in 2018 – and the year just got started.

While a EUR/USD at 1.25 seems to be of no concern to the ECB (which frankly surprises me) a push toward 1.3 or even higher will invariably begin to exert a drag on exports coming out of Europe. This stuff really isn’t that complicated and the United States, now flush in easy cash, remains to be the #1 consumer market on the planet. But all that said, once currencies start trending (up OR down) they usually continue far past your imagination, so being long the Dollar right now and right here will most likely turn out to be losing proposition.

Here’s a medium term view of the current bane of my existence – the EUR/USD. Suffice to say that life in Spain was quite a bit cheaper over the past few years and it doesn’t look like as if it’s going to get much better anytime soon. Which means I continuously am hedging myself to soften some of the damage.

Equities are completely out of control thwarting even the past eight years of perpetual effervescence. Looking at the monthly panel one cannot help but take pause as the S&P (shown here is the E-Mini) has gone vertical. This cannot go on forever and as always it’s not going to be the bears that break this exponential curve but a lack of buyers.

Now here’s gold which has been through hell and back over the past seven years. The current formation on the monthly panel could easily still resolve downward, let’s not kid ourselves, but a door is now presenting itself. Ignoring for a moment all the silly squiggly or straight lines, placed to somehow help us interpret the tea leaves of market price action, it is not unreasonable to assume that a push > the 1400 mark may just change the dynamics all across precious metals and perhaps even ignite a massive short squeeze to the upside.

Of course any of that is predicated on the Dollar remaining in the place it lives right now: beaten, abused, and hated by everyone. Which is strange IMNSHO as none of us would be getting out of bed in the morning without the prospect of attaining more of it. As a little side note: Any efforts by government to curb, control, or regulate crypto currencies are increasingly becoming a tough sell given that most of them have been hell bent on destroying the purchasing power of its own citizens. Just saying… ;0)

I was mentioning gas prices in passing yesterday and I was not exaggerating as this crude chart is looking ‘bullish as f..k’ if you will forgive my French. That, ladies and leeches, is a bonafide weekly squeeze & trend break out pattern and $80 or even $90 by this summer is becoming a real possibility. Once again my disclaimer that this is predicated on the Dollar continuing residence in the house of pain.

Don’t miss out on plenty more LT charts waiting below the fold:

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Now if you’ll excuse me, I have important ‘business’ to attend to.ย Enjoy your weekend!


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at the usual social media waterholes.
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  • ridingwaves

    http://www.businessinsider.com/how-a-strong-dollar-is-hurting-china-2017-1

    china is also driving this, Trump and Li Keqiang probably cooked it up over some dim sum….

    look at his economic resume….they are now partying in financial circles….

  • Richard Adler

    Cheers!

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    go long gold, 1100 Euro – it’s your best chance of survival.
    ๐Ÿ˜‰

    https://uploads.disquscdn.com/images/44e4f04cb30b2b792138497f7d7e04930eda3de155f9f7db3023810bdaacdb1e.png

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • Yoda

    Most excellent post. Right in my alley.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    GDX,
    gap closed yesterday, aaaaand at support today.

    http://stockcharts.com/h-sc/ui?s=GDX&p=D&yr=1&mn=2&dy=0&id=p27702436981

    Fridays are usually boring, if there’s an RSI breakout, I speculate it will be next week.
    -GG

  • Yoda

    “Never ever stop in front of a moving freight train unless your ass is tied to a bungee cord connected to a fast action winch.”
    I am stealing this as my new Disqus Biography ๐Ÿ˜‰

  • Tomcat

    How many times has that “support” held in the past?

  • ridingwaves

    i’m going to do my best to find Mole a nice place in costa rica

  • http://evilspeculator.com Sir Mole III

    I may just drop by!

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    good question.

    Never.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    Mole Travel – Red Alert!!
    ๐Ÿ˜‰

  • ridingwaves

    excellent internet bandwidth, beaches, jungle, fresh seafood and huge expat community, I would never buy there, too many empty US citizen homes to rent…

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    it’s too long..

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    the key is Mrs. Evil.

    EDIT:
    http://www.liveincostarica.com/blog/

  • Yoda

    I have never been there. What town of the beach do you recommend for an R&R vacation?

  • Yoda

    That’s what she said..
    ๐Ÿ˜‰

  • ridingwaves

    Flamingo Beach, Portero, Playa Grande, Playa Langosta…fly into Liberia to make it real easy. Other areas in southern part get more rain but beautiful in their own way. Guanacaste area is drier…still gets rain but less than

    https://www.entercostarica.com/images/auto-sized/new_ecr/680×340/pages/48-flamingo-beach.jpg

  • Yoda

    Lovely! I’ll look it up. Thanks

  • BobbyLow

    Just gave a quick look on the VRBO website and lots of reasonable units available. (I’m not crazy about hotels.)

  • ridingwaves
  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    F.
    it looks good on the technical daily. but the same chart switched to weekly?…I’ll pass.

    https://uploads.disquscdn.com/images/8d330be653487f8267e58ca2d8835ce94f8f70b5c3c2f61803c7a28a3e0c7962.png

  • StockTalker

    Currently short -5 /YM & -2 /NQ

  • ridingwaves

    I rented a home for 15 days that had a view that even today has not been topped….you wanted to hang out in the infinity pool with a drink and watch every sunset. VRBO listing to boot and I thought cheap….I’m not a hotel guy either when you can have a house, some friends and always go out to eat if you want.

  • BobbyLow

    Just went long Oil via UCO to go with my positions of Short Gold and Short OIH. This is a mixed bag but I guess it is what it is.

  • ridingwaves

    house I rented in Southern part of country, don’t expect to sleep in, those Toucans and howler monkeys get up early… https://uploads.disquscdn.com/images/373e0586a10ea7e5c64530f2b57db9e298996916ad35a04c44dc33a4718654f6.jpg

  • HD

    Cheers! Is that you with the sweet beard?

  • StockTalker

    TVIX will have 4 green days after today. Go bears!

  • HD

    GDP 2.6. that makes 14 of the last 16 economic releases BELOW expectations. #MAGA

  • StockTalker

    /YM 4 hr chart reveals the largest div ever seen in a very long time.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • HD

    Pura Vida! We did a cruise out to Isla Tortuga while we were there. Had the island to ourself. It’s not that expensive and everyone is so friendly there.

  • Yoda

    Chart please

  • Yoda

    Sweet music to my ears.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • Yoda

    Damn, I think I’ll pass the dip in the river

  • Ronebadger

    S&P up 1/2 percent. ADV/DEC = 15/13 What a rally!

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    all priced in more and more worthless dolla’s.

    Zimbabwe away!

    EDIT: is the NAZ leading the way? yes it. is.

  • StockTalker

    The problem now is that shorts are adding fuel to the fire now. See if the worm turns.

  • Yoda

    5 min Zero signal and mole indicator are not supporting today’s rally.
    https://uploads.disquscdn.com/images/07578e591c19a28188bca272c73760bc4b07f2af43f74f68811a0413e4e9517d.png

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    I made a mental note:
    anything 0.3 and under is trivial. don’t place emphasis on it.
    Have another indicator.

  • StockTalker

    Hearing allot a squawking about people I know wanting to retire now with their investments being where they are. It’s time to take it back now:) The government wants them to continue working! It’s a sick world but that is how the world turns.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    new Index highs loom,
    I’m shifting to a shorter envelope.
    Mercy.

    [QQQ]
    http://stockcharts.com/h-sc/ui?s=QQQ&p=D&yr=2&mn=2&dy=0&id=p26120770117

  • Julie

    Hi Chief and everyone . Today in the observing mode
    JULIE

  • BobbyLow

    Hi Julie, hope you’re feeling better after your recent battle with a cold or the flu.

  • Julie

    Hi BL Sharon gave me some tips on what to do with some supplements WOW ! Really helped. About 95% right now I hope Mole’s wife is doing better. Other people I know it takes about 2 weeks Thanks BL
    JULIE

  • Julie

    Unreal how BAC is holding the daily 5 ema Again today the low Yes the daily 5 ema. The first domino to fall will be a bearish close below the 5 ema JULIE https://uploads.disquscdn.com/images/34d9bd50cdb6050c144f77ae81a0fde0a70e283381fc76be41486ada59e525b0.png

  • Julie

    You can see the dipsters came in on the Ichi cloud baseline (21)(red line) 7 trading days prior
    JULIE

  • StockTalker

    Love it, crude high 66.66

  • StockTalker

    /HG trade doing well, ready to short crude oil now.

  • StockTalker

    So obvious here, TVIX climbing with the market. Short cover rally it is:)

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    this keeps up, I’ll have to convert all my SMA’s to EMA’s.
    ๐Ÿ˜‰

  • Julie

    What GG You do not use ema’s now ! Where have you been ? LOL !
    JULIE

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • http://www.linkedin.com/in/sharondsessions/ Sharon

    That’s Good. That Vit C is really wonderful with the instant dose and the time release dose all at once. It always helps me.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    this guy is a ‘C’ fanatic, he’s either legit, or crazy.
    https://www.youtube.com/watch?v=W5Bgdqsorg0

    https://en.wikipedia.org/wiki/Andrew_Saul_(nutrition)

  • Mark Shinnick

    Bot a bunch of labd. Extremely tight stop. Its OK to be wrong so recognize it quickly.

  • Julie

    Hi Mark EOD may buy BB esp a close above 13.49
    JULIE

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • Yoda

    VXX positive too, and 5 min zl in negative territory for most of the day so far.

  • Julie

    GG Just bringing up a chart LABD too weekly down to a lower trend line. Checkout the selling volume A possible selling climax ? Shown LABD weekly chart JULIE https://uploads.disquscdn.com/images/5f90c9f1288fac8f5d46646aef723f21e1447a827728519a0b47a5b804a21203.png

  • Mark Shinnick

    Yes…this could be the best yardstick of Art. Most of my model’s signaling comes from volatility.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    share a chart! you can do it!!
    take the next step!

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    throwing a straight channel on a two year chart is risky,
    if that line breaks however, wowser.

  • Mark Shinnick

    My old DOS software writen 1989 has great chart functions…I still need to code for internet. Been a long time trading this way. Stood aside labd….for now.

  • Julie
  • Mark Shinnick

    Yeah…would just love to see that potential opportunity.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    ah yes, those were the days. I knew them well.

    http://i.imgur.com/ycgwaCT.jpg

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    look at that volume!!

  • Julie

    GG with the weekly RSI at 27 I would play the weekly chart with a bullish reversal candle and no cougaritis
    JULIE

  • Julie

    Yeah GG a possible selling climax as noted above
    JULIE

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    I LOVE selling climaxes.

  • Mark Shinnick

    Yeah, at the time I carried a laptop molded into a briefcase with a Signal FM receiver all assembled myself running my own software. With cellphone it was amazing for the day. The graphics functions had to quickly tell me the whole story…in 1989 the laptop was Monochrome.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    impressive.

    my first introduction was in 87 with some old 286’s.
    ๐Ÿ˜‰

    http://www.vintagecomputer.net/compaq/portable_286/Compaq_Portable-286.jpg

  • Julie
  • Mark Shinnick

    Yeah, memory management was sometimes so vexing.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • Mark Shinnick

    Yeah.. the 2 386 towers in ’89 were like $3500 – $3000 each. Damm things were running 24/7 with backtests.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    crazy huh. The 486 was a Monster when it came out.
    someone got freaking rich.

  • Julie

    GG Feeling much better . As stated in a post below Sharon gave me some tips on supplements and have helped tremendously. Feeling about 95%
    JULIE

  • Mark Shinnick

    Indeed, it really helped the suitcase by around ’92 or so.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    INTC went higher, did you see it?

  • StockTalker

    Good time to pounce right now.

  • Julie

    Yeah I have GG The 47 top has been nullified. Not only that but the day’s low was a bounce off resistance turned support and corroborated by strong up volume.
    JULIE

  • Julie

    Taking a stab short XHB below 46.16 very small short probe
    JULIE

  • Yoda

    Found this in my e-mail today:

    Bitcoin explained in laymanโ€™s term:
    A lot of monkeys lived near a village. One day a merchant came to the village to buy these monkeys! He announced that he will buy the monkeys @ $100 each. The villagers thought that this man is mad. They thought how can somebody buy stray monkeys at $100 each? Still, some people caught some monkeys and gave it to this merchant and he gave $100 for each monkey. This news spread like wildfire and people caught monkeys and sold it to the
    merchant. After a few days, the merchant announced that he will buy monkeys @ 200
    each. The lazy villagers also ran around to catch the remaining monkeys! They sold the remaining monkeys @ 200 each. Then the merchant announced that he will buy monkeys @ 500 each! The villagers start to lose sleep! … They caught six or seven monkeys, which was all that was left and got 500 each. The villagers were waiting anxiously for the next announcement.
    Then the merchant announced that he is going home for a week. And when he returns, he will buy monkeys @ 1000 each! He asked his employee to take care of the monkeys he bought.
    He was alone taking care of all the monkeys in a cage. The merchant went home.
    The villagers were very sad as there were no more monkeys left for them to sell it at $1000 each. Then the employee told them that he will sell some monkeys @ 700 each secretly. This news spread like fire. Since the merchant buys monkey @ 1000 each, there is a 300 profit for each monkey. The next day, villagers made a queue near the monkey cage. The employee sold all the monkeys at 700 each. The rich bought monkeys in big lots. The poor borrowed money from money lenders and also bought monkeys! The villagers took care of their monkeys & waited for the merchant to return. But nobody came…

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    don’t find the trend, some massive hedge fund removing their short positions. at least that’s what I tell myself.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    (eye roll, should I read this? is this funny?..)

  • Julie

    I know GG we discussed the parabola INTC
    JULIE

  • Mark Shinnick

    Rebot labd few min ago…prepared to be wrong.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    I had a feeling. When the bad news came out about the security back door. And Market shrugged off like, ‘no biggie’. something was up.

  • Mark Shinnick

    Long predates btc; a classic.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    I read it. pretty good.

  • Mark Shinnick

    …standing aside …again.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    3.00 to 3.04 range
    how much leverage are you using??

  • Julie

    Mark Myself I would https://uploads.disquscdn.com/images/bb985c320f542fbbf0c83a1ebafed99278464fedd0e5407ad16091b68b07e629.png wait for a bullish close above the daily 5 ema with targets the Ichi cloud conversion line (8) ; 21 ema and baseline 21. The daily 5 ema works great as a filter when trying to nail a bottom Just saying JULIE

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    I’d wait for the histogram to go positive.
    (different strokes)

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    Mark Yusko?
    top predictions are like assholes, everyone’s got one.

  • Julie

    GG That too Also the weekly RSI is at 27 and wait for a bullish reversal candle on the weekly chart
    JULIE

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    time. check.

  • Julie

    10 min GG You and Everyone Have A Great Weekend
    JULIE

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • Julie

    GG IMO XHB a pause to go lower. Took a small short probe XHB. GDX a possible consolidation and may go higher perhaps up to approx. 24.53 then down. A break below 24.20 in lieu of going up to 24.53 would be bearish immediately
    JULIE

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    XHB is sitting on some MA ledge.
    GDX, is at support. though some question “support”.
    LoL.

  • Julie

    GDX 24.12 is an important level to break down thru 24.12 is the Ichi Cloud conversion line (8) and level 3 (.76393)
    JULIE

  • BobbyLow

    No changes and holding pat with 3 open positions over the weekend. It’s been a very good week. Have a great weekend everyone. ๐Ÿ™‚

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • Julie

    You too BL !
    JULIE

  • Mark Shinnick

    Yes different strokes. This is often tic-based or 1 min, with the sensitivity decreasing from time filtering as the most local tic and 1 min atr’s decrease. As this happens, 5 min atrs reign and gradually up to 90 min as shorter periods show more and more relative noise.

  • Julie

    Same page GG Yeah !
    JULIE

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    that’s what scares me.

  • http://evilspeculator.com Sir Mole III

    Man, that brings me back…

  • http://evilspeculator.com Sir Mole III

    Everyone’s a critic…

  • http://evilspeculator.com Sir Mole III

    That sounds a bit like roughing it. You promised Internet bandwidth!!

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • Ronebadger

    Got this off Twitter:

    Q: What did the 2018 bubble say to the 2000 bubble?
    .

    .
    A: Watch this.

  • Mark Shinnick

    He is basing on the shoulders of giants like Linus Pauling…can’t get much more legit.