NFTRH+; USD & Markets, Short-term

My feeling – quite possibly wrong, but IMO not misguided – is that things are getting a bit hysterical now based on one cool jobs report and one cool CPI report (well, a trend of them, but work with me here). Suddenly the same algos and machines that ignored the disinflationary trend for months are now programmed for max reaction?

Anyway, the US dollar is getting smoked, but there is a support area at the 62% Fib retrace, per this tweet showing a weekly chart. It could be an area to watch for a potential bounce in the coming days. Meanwhile, bounce or no bounce, I see no reason not to be taking the 93.50 target ever more seriously given the buck’s breakdown below previous support at 101 (+/-).

From NFTRH 765:

PMs would likely rally along with inflation trades if USD breaks down. With a majority of the planned for correction in the books, so much the better.

So if the PMs are rallying with the inflation trades, expect them to get dinged with them when the USD attempts to bounce. Not if it bounces. When it bounces.

Meanwhile, Silver is rampaging with the implication of a new high for the rally, assuming this is not a bull trap break through the SMA 50.

Somewhat importantly to the precious metals and very importantly to the inflation trades, silver is doing this vs. gold. So the signaling is still pro-inflation trades, anti-USD. But again, we see a bit of a hysterical spike going on.

In a recent report or update, we noted that on a seasonal average gold bottoms now for the year. So this week is handy activity in that regard. We also noted that silver bottoms now but makes a new low (on average) in October after topping in August. So that’s not so positive.

I am also concerned about the Dumb Money that is flying the broad market. Of course, the areas we’ve been focusing on (precious metals and commodities/resources) are not where the dumb money has clustered. But it is still a concern. A broad market bull today is running with alarmingly dumb money.

Really, that’s all I’ve got for the moment. It’s a high risk broad backdrop out there. Risk is one thing but realized risk is quite another. The market graveyard is littered with souls who tried to time risk by taking action. But I think that if there is going to be a hitch, hiccup or correction to the current mini-mania, it could come in tandem with USD finding support for a potential bounce.

I am not trying to cause people to overreact, but I am trying to raise a flag on a potential caution point upcoming.