There are many distractions to take our eye of the US Dollar at the moment, the biggest one being the plight of the Euro closely followed by the plight of the British pound. Sooner or later the focus will return to the dollar as the investment community becomes immune to the constant stream of bad news emanating from the fatally wounded eurozone.
We could well be too early in making this call but it appears to us that the dollar may now have run its course and will now look to take a breather. As we can glean from the chart, over the last two months the Euro has been under the gun, resulting in a rally for the USD as the preferred currency. Also note the gap that is opening up between the dollar at '88' and the 200dma, which stands at '79'. The RSI, MACD and the STO are bouncing along at the top of their respective ranges and sooner or later they will return to somewhere more in the middle of their ranges. So the dollar now appears to be a tad overbought, in our humble opinion.
If we are anywhere near correct with this view and the dollar starts to correct we could see various money managers looking to lock in their current profits and place their bets in another asset class.
Three points if you can guess which one!
Have a good one.
Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.
The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:
On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.
On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.
Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.
Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.
To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.
For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.
For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.