Dollar Index: The dollar index remains in a long term bear market. The one year to date performance for DXY is -0.93%. The two year-to-date performance shows that DXY lost 6.02% and in the five year-to-date time frame DXY lost 3.39%. The longer term weekly moving averages are in a strong bearish set-up, 20 week 91.72, 50 week 91.65, 100 week 94.43, 150 week 95.34.
On July 29, the September dollar index generated a short term sell signal and an intermediate term sell signal appears inevitable. Trade this index from the short side. There will be periodic strong rallies, but the long term trend is decidedly lower.
WTI Crude: On August 31, November WTI crude generated a short term buy signal and it remains on an intermediate term sell signal.
Copper: On August 31, December New York copper generated a short term buy signal and remains on an intermediate term sell signal. After a strong rally from the March 2020 low of $2.4300 basis New York, copper had an extraordinary rally until May 2021 when December New York futures topped at $4.8985. From there, copper began a corrective phase and dipped to $3.9800 in mid August. Despite this, December copper remains 40.15% higher one year-to-date.
Although September is a weak month for copper on a seasonal basis, it strengthens during the fourth quarter. The weekly moving averages are in a very bullish set-up: 20 week $4.4160, 50 week $3.9498, 100 week $3.3007, 150 week $3.1112.
Gold: On September 3, December New York gold generated an intermediate term buy signal after generating a short term buy signal on August 24.
December gold’s 100 day moving average has just crossed above the 200 day average, a very positive development. Although gold is entering a seasonally weak period, its bias now appears to be sideways to higher. New York gold futures have solid support at the $1,670 level going back to March 2021. The open interest action for gold has been outstanding during the past several weeks, meaning that it has increased on rallies and declined on setbacks.
A major contrarian indicator: A well known gold bull for the past ten plus years liquidated nearly 1.9 million shares of GLD, the gold ETF after holding the position for over a decade. I see this as a positive development and increases my conviction that higher prices are likely ahead. The longer term weekly moving averages are in a strong bullish set-up, 20 week $1,816.80, 50 week $1,821.60, 100 week $1,749.40, 150 week $1,614.50.
GVZ, the gold volatility index is trading below its 20, 50, 100, and 200 day moving averages, meaning that gold options are cheap. Gold volatility tends to rise with advancing prices, which means that holders of long calls will obtain the additional benefit of expanding option volatility if gold prices rise.
It appears likely that both silver and platinum will generate short term buy signals this week perhaps as early as Tuesday, the first full day of trading after Labor Day. This lends additional credence for a move higher in precious metals.
To read about my analytical process for stocks, visit online booksellers, Amazon or Barnes & Noble and enter the title “How I Trade Stocks” by Garry Stern.