August and September tend to be the weaker months for stocks. August 2015 also seems recently in memory, and while January 2016 drop was about the same, the August decline was sharper, with most damage from highs occurring in just 5 trading days.
But with everyone anticipating seasonal weakness, I don't think this year will be as severe. This may or may not be correct, and at some point stocks will have another drop of 5% or more, but my guess is that August and September are more stable for stocks. A correction could be in time, not price, with a choppy range bound period.
But $DXY is falling off a cliff and GLD is perking up, and so in addition to oil which is suddenly showing long term strength for the first time in months, I am wondering about a $DXY melt down and GLD melt up as the next near term best move. Let's look at all 3 charts. DXY first.
DXY Q
First support not until 91 area with 38% Fib, 20MA and 100MA.
DXY M
38% fib from higher anchor is nearly 92. Rising 50MA is currently 91.55 and will be higher as August opens. If that goes, however, 88 area with monthly 200MA and 50% beckons. RSI sliding below 50 also points to more chance of reaching 30 area.
DXY W
Red lines at various weekly close and price lows of past 2 years. Rising W200MA currently 92.13 seems like it will test.
DXY W pivots (long term)
Possible support at 2HS1 92.79, and if that goes then 90 is next long term support.
DXY D
Daily chart with pivots and MAs. Arrows show bounce attempts or lack thereof. Blue shows 5 day bounce to JunP. That was the best! Otherwise red arrows show where support crumbled without any attempt at bounce at all!
Bottom line - DXY while weekly and daily RSIs are fully oversold, this is in meltdown mode. Currency trends tend to persist more than stocks and with every Trump antic selling seems to increase. Watching 2HS1 and weekly 200MA but the way it is moving $DXY could semi-crash through 2015-16 lows. This would set the stage for major melt up in GLD!
GLD Q
Falling 20MA resistance for 3 of last 5 bars, but note last bar weak selling and currently lifting from rising 10MA. If that 20MA clears there is a lot of room to upside.
GLD M
Congestion for the last several months between falling M50 and rising M20 seems to be resolving to upside.
GLD W
From below all weekly MAs just 3 weeks ago to above all. 6th time since 2016 trying to clear weekly 200MA, and 4th time this year. It could fail again but chances are just as good we see upper weekly BB or higher.
GLD W
2HR1 to YR1 target 124-126 is not unreasonable! YP and 2HP just had liftoff so why not?
GLD D
Above all pivots and likely to open above the AugP. Already above 61% Fib. MACD cross 7/18 did not correspond with pivot or MA buy, but above Q3P on 7/21. But here late and RSI getting up there but I am thinking stage set here for melt up above the prior highs. Also note huge buying from D400 thick brown ie monthly 20MA (and yet monthly 20MA still looks like resistance on that timeframe). 7/11 20% portfolio long nice pick if i do say so, but if this is going higher and suddenly GLD above all pivots with USA mains below AugPs (could happen). there is room to increase.
GDX
Has been weaker than GLD technically for much of the year, with 3 breaks of YP although no downside follow through. GLD had just 1 break. Also, GLD well above D200MA 3 separate times and GDX barely above and even still touching on Friday 7/28. GDX has not met condition of above all pivots & MAs for much of this year - however, any higher and it will do it!
