How's this messy market treating you?

Are you happy the market is a mess? Or do you find it frustrating?

Keep in mind, the S&P500 is still at the same price it was 2 months ago.

Both the Nasdaq100 and Dow Jones Industrial Average are still at the same prices they were back in February.

We're almost half way through May.

The Technology Index, which is the largest component of the S&P500 (30%) and has the largest weighting in the Nasdaq100 (50%), is still where it was back in January.

Again we're half way through May!

Meanwhile, don't forget about the Small-cap Russell2000 that's hilariously still stuck below where it was way back in December.

The Consumer Discretionary Index and Dow Jones Transportation Average are also down for the year.

That's the market...

From the Desk of Ian Culley @IanCulley

Buyers are coming to the dollar’s rescue following last week’s drop.

But I’m still bearish. 

Of course, none of that matters if the US Dollar Index $DXY continues to rally and these trade setups fail to trigger entry signals.

Here’s a quick look at the DXY finding support at a critical retracement level:

It’s a logical area for dollar bulls to take a stand as a shelf of former highs act as support.

However, crude oil's slide below a similar shelf of former highs raises doubts about a sustained bullish defense. 

The DXY’s 105 level has acted as an excellent line in the sand. I continue to track this area of the chart and Friday’s low of 104.52 for confirmation of dollar weakness.

If the dollar rolls over, the following trades will track toward our initial targets…

The euro

Last week...

What's on your mind these days?

I'll tell you what I'm thinking about.

I'm used to a market where stocks struggle when the US Dollar are US rates are rising. And that's what we've seen all year.

And while the data certainly points to a market of stocks that have been grinding mostly sideways over the past few months, stocks haven't done nearly as bad as you'd think, considering just how strong the Dollar has been and how much rates have risen.

So the question for me is whether these consolidations are going to resolve higher or lower?

And what the implications might be....

A lower resolution here could be a massive tailwind for stocks.

Remember, during Election years, the market...

From the Desk of Ian Culley @IanCulley

The Japanese government isn’t playing games.

Currency crisis or not, Tokyo is willing to defend the yen in the open market. It's proven this multiple times over the past three years, and today’s FOMC-related volatility will likely test its resolve. 

Considering previous yen-buying interventions, the dollar, interest rates, and the dollar-yen pair could be headed lower in the coming months.

Before we dive into the yen, here's a quick update on the action in the euro and pound.

The euro retested its breakdown level from earlier this month, forming a bear flag:

A close below 1.06 completes the flag pattern and sets a rough downside objective of 1.0450.

The British pound also pulled back this week:

Instead of simply...

The month isn't over yet but I peaked.

How many assets can you think of that have been positive every single month this year?

Where do you find the most consistent leadership?

Is it in Technology?

No. Tech is down over 4.5% the past 2 months.

Is it Consumer Discretionary?

Nope. It's down 2 months in a row, falling almost 3%.

The answer is the US Dollar and Crude Oil Futures.

As we enter the final day of April, these 2 assets have been positive every month so far in 2024.

From the Desk of Ian Culley @IanCulley

Did you see the candlestick in the Mexican peso last Friday?

It was all wick!

The way I learned it, you want to trade in the opposite direction of blow-offs like this. 

That means betting on a stronger peso and an end to the stock market correction.

Check out the XXXL lower shadow in the Mexican peso futures (denominated in USD):

Last Friday’s intraday swing spanned six percent and registered the highest single-day ATR reading since March 2020.

Despite the earth-shattering volatility, the bulls prevailed. That’s the critical lesson from last week’s action: The bulls immediately repaired the damage. 

That trend will likely continue in the coming weeks and months. If it does, US stocks, especially the materials sector, will resume their uptrend.

Check out the historically positive correlation between the Mexican peso and the Materials Sector ETF $XLB:

...

This is the video recording of the April 2024 Mid-month Conference Call.

From the Desk of Ian Culley @IanCulley

Have you noticed these trends driving the markets?

Commodities are ripping. The energy sector is outperforming. Interest rates are climbing while US treasury bonds fall apart…  

Of course, we can’t forget about the US dollar’s rally.

I continue to err in the direction of these underlying trends. But the dollar rally will likely run out of gas soon…

Check out the US Dollar Index $DXY printing its highest level since November. 

My near-term DXY bias flipped bullish late last month. Aside from improving momentum and multiple tests of overhead supply, our bullish USD trades shifted my outlook.

The tactical shorts in the British pound and New Zealand dollar were in play and have...

The disaster for the Dow Jones Industrial Average continues.

Yesterday the Dow closed at a new 52-week low, priced in "Real" Money.

When you look at the Dow priced in Fiat Currency, it's also acting weak, actually DOWN since the start of February.

Here's what that looks like:

From the Desk of Ian Culley @IanCulley

Interest rates are climbing worldwide. The US dollar is dominating the pack.

And commodities are kicking off the next leg of a bull run that began in 2019.

The primary trends that opened the decade are showing no signs of reversing. As long as they remain intact, we must lean into them.

I can’t think of a stronger trend to ride than the dollar-yen…

The USD/JPY pair is posting its highest level since June 1990:

Now that’s a big base breakout.

Fresh 33-year highs ignite the imagination. But, from a tactical perspective, I’m more concerned with the completion of a 17-month cup-and-handle.

Here’s a closer look:

I outlined our breakout and target levels in ...

Think of Gold as the stable asset. And then stocks and other forex markets are just trading up and down relative to the price of Gold.

This week we discussed the fact that currencies all over the world have been losing their value, particularly relative to the price of Gold.

But this month now even the US Dollar has broken down relative to Gold.

You can get all those details here.

So if we're going to take the value of stocks and other fiat, and price it in Gold, then we should treat Crypto the same way.

Here are Bitcoin and Ethereum priced in "Real Money":

Did you see Gold just close at the highest price in history?

This is something we've never ever seen before - Gold closing out a week above $2300/oz.

It's the highest valuation for Gold in its entire history.

This is what that looks like: