De-Dollarization of U.S.$?

* See UPDATES below...

Several articles have been written recently about the possible de-dollarization of the U.S. Dollar, as shown below.

Source: ZeroHedge

Source: ZeroHedge

While I'm not an expert on the matter to say "Yay" or "Nay," I can provide the following monthly charts of the U.S. Dollar (DX) and Gold (GC).

The charts show an inverse correlation to each other. Furthermore, their major resistance and support levels are depicted thereon...as noted below:

• DX: 107.00, 100.00, and 90.00
• GC: 2000, 1800, 1600 and 1400

Very simply, keep an eye on whether or not DX is able to hold above the 100.00 level. If not, we could see it re-test 90.00, or lower, if GC holds above 2000 and gathers momentum. However, GC is nearing a bearish triple-top formation, so it may face stiff resistance around its prior high of 2089.20 set in August 2020. If it spikes through that level, with sustained force, we could see buyers pile into Gold and sell the Dollar, especially if traders/investors view the long-term Gold formation as a bullish cup & handle pattern.

BUT, I think we'd need to see some sort of major global catalyst occur to produce such a buying and selling frenzy. Exactly what that would be remains to be seen.

However, it's worth monitoring their movements over the coming weeks for hints of sustained rising volatility and potential chaos in these and other world markets (equities, ETFs, bonds, currencies, commodities, and crypto currencies).

N.B. For a further detailed analysis that I recently published on Gold, please refer to my post of December 6, 2022, wherein I outlined a technical case to be made for Gold to reach $3000, in accordance with one of Saxo Bank's "Outrageous Predictions for 2023."

* UPDATE April 20...

Countries dumping the U.S. Dollar...

Source: ZeroHedge

So, will we see China's Yuan become the dominant international reserve currency, if the following global GDP projection materializes?

* UPDATE April 22...

As U.S. debt grows and the U.S. Dollar weakens, the value of Gold should increase over time...

Source: ZeroHedge

* UPDATE April 24...

As a hedge against U.S. sanctions, many foreign countries are buying Gold...

Source: ZeroHedge

* UPDATE APRIL 25...

In emerging markets, Gold is surpassing the U.S. Dollar, as a safe haven...

Source: ZeroHedge

* UPDATE April 28...

More on de-dollarization...

Source: ZeroHedge

S&P 500 FUTURES INDEX: A Clue To Capitulation

When we see an extreme volume spike form on the following monthly chart of the S&P 500 Futures Index (ES), it may be close to a bottom/capitulation, particularly if it falls near one of the major support levels, as shown.

Further bottoming clues are described, in detail, in my articles of October 2, September 30, and September 24, pertaining to the corresponding SPX and the SPX:VIX Ratio.

Until then, I expect volatility to continue, producing large intraday swings in both directions.

SPX: Q3 Wrap-Up & Outlook For Q4 2022

* See UPDATE below...

Further to my posts of September 30 and September 24, the following will summarize SPX market action for the month of September, Q3 and year-to-date.

Please refer to the following three charts...namely, the yearly, quarterly and monthly timeframes for the SPX.

YEARLY TIMEFRAME:

A bearish engulfing candle has formed, so far, this year on the yearly chart, and it has a range of 1,234.49 points...the second largest on record, after the 2020 range. It closed at a new low in 2022 and well below its yearly pivot point of 3996.12.

The SPX:VIX ratio, shown at the bottom of the chart in histogram form, is sitting just above an important major support level of 100.00, and has fallen below both 5 and 20-year MAs...depicting extreme bearishness on this timeframe.

SPX Yearly Chart

QUARTERLY TIMEFRAME:

Note the long upper spike on the Q3 candle, where it faked a bullish reversal, before falling to a new quarterly low close for 2022...and well below its quarterly pivot point of 3831.68.

The SPX:VIX ratio, shown at the bottom of the chart in histogram form, is sitting just above an important major support level of 100.00, and has fallen well below both 5 and 20-quarter MAs (which are about to form another bearish crossover)...depicting extreme bearishness on this timeframe.

SPX Quarterly Chart

MONTHLY TIMEFRAME:

Note the long upper spike on the September candle, where it faked a bullish reversal, before plunging and closing at a new low for 2022...and well below its monthly pivot point of 3763.01.

The SPX:VIX ratio, shown at the bottom of the chart in histogram form, is sitting just above an important major support level of 100.00, and has fallen well below both 5 and 20-monthly MAs (which formed another bearish crossover in April)...depicting extreme bearishness on this timeframe.

SPX Monthly Chart

PIVOT POINTS FOR OCTOBER:

The following Pivot Point Calculator depicts the Pivot Point, 3 Resistance Levels, and 3 Support Levels for the month of October (taken from the data of the September candle)...which are possible upside and downside targets.

Note that the S2 target is in line with the first major support level of 3200, mentioned in my post of September 30, while S3 sits just above the next major support level of 2800, also mentioned therein.

Investing.com Pivot Point Calculator

(via Strawberry Blonde's Market Summary)

CONCLUSIONS:

1. As I mentioned in my post of September 30, until we see the SPX:VIX ratio fall to somewhere around 80.00, or more likely 60.00, I don't think we're close to an equity capitulation, yet.
2. Furthermore, and, as I concluded in my post of September 24, all in all, I see no pivot away from U.S. Dollar strength and global equity and sector (and Bitcoin) weakness...YET.
3. So, for the moment, U.S. cash is king, as the U.S. Fed has signalled its intent to continue raising interest rates and keep them elevated for some time after inflation has declined to the Fed's 2% maximum inflation target...which could last well into 2025.
4. As an aside, my 2021 Market Wrap-Up and 2022 Forecast (written on January 1) has been fairly accurate, to date. By the way, the S2 target for the 2022 timeframe (calculated from the 2021 candle) is close to 3200 (and the Pivot Point from the 2020 candle sits at 3236.04), while the S3 target is close to 2800...both of which are likely targets, either for October, or sometime this year...especially 3200, where there is a confluence of a variety of Pivot Point targets, as well as (first) major price support. Here are several excerpts from that post, as well as my last update therein...

Finally, until President Biden drastically changes course from his 'Big Government Tax & Spend' agenda, and unleashes the oil and gas industry by dropping his overly-restrictive and punitive regulations, trade with caution, as I expect high volatility and large intraday swings to continue!

* UPDATE Oct. 10...

If JP Morgan CEO Jamie Dimon's projection is correct, a further 20% drop on the SPX (from 3600) would send it down to around 2880...and in line with the S3 target mentioned above...or 2800 on a downside overshoot.

While it may not hit that level this month, 2800 is a major price support level shown in my article of September 30...and a possible eventual target.

SPX Monthly (intraday price October 10)

Source: ZeroHedge

British Pound's Breaking Point

* See UPDATES below...

The British Pound (GBP/USD) is taking a beating in overnight trading as it crashed to a new all-time low of 1.0384, so far...below the record low set in early 1985.

Its long-term major support (breaking point) of 1.4000 was broken in April of 2016, and it never recovered.

As I mentioned in my post of September 24, the US Dollar has strengthened this year against all other foreign currencies, including GBP/USD.

Unless GBP/USD retakes and holds above 1.4000, expect more volatile swings and, possibly, a break below parity.

Source: ZeroHedge

* UPDATE Sept. 26...

Will the Bank of England raise rates aggressively before their next scheduled meeting on Thursday, November 3 to stem the rout in the Pound Sterling?...

Source: ZeroHedge

* UPDATE Oct. 18...

Notwithstanding the recent bounce in the GBP/USD, there is still much trouble ahead in the UK...for PM Liz Truss...the Pound Sterling...and UK Gilts.

No doubt, volatility will continue to play havoc in their bond, currency and stock markets for some time.

Source: ZeroHedge

* UPDATE Oct. 19...

UK's inflation is still rising...now at a new 40-year high of 10.10%.

Source: ZeroHedge

And, GBP/USD has dropped on today's inflation report.

The Balance of Power has shifted, once again, back to the Sellers on the daily timeframe.

Inasmuch as, no 'quick fix' is being provided at this time by new PM Liz Truss, expect volatility to continue in the Pound Sterling, UK Gilts, and UK FTSE 100 Index.

Historically, the FTSE 100 Index has had difficulty holding and increasing gains above 5000, as shown on the following monthly chart...which forms a major support level. 

A drop and hold below 6000 could see a retest of 5000, or lower.

So, yeah...more trouble for PM Liz Truss. 😮

Who's in charge?

What a mess! 😕

Source: ZeroHedge

ZeroHedge excerpt

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* UPDATE Oct. 20 & 21...

Well, that didn't take long...she's gone...who's next?

UK markets are still stuck in limbo (range bound).

Overall, it's still a mess...as theories emerge about what happened and/or what's going on, politically.

Source: ZeroHedge

* UPDATE Oct. 25...

What could possibly go wrong?...🤔

* UPDATE Oct. 26...

Well...that didn't take long! 😯

Here's a prime example...Sunak's following the WEF doctrine, unlike Liz Truss, who reversed the ban during her short stint as PM.

So, which PM was/is looking after the best interests of the UK, rather than those of the WEF? 🤔

What/who else will be banned next?

* UPDATE Oct. 31...

If the following is true, keep an eye on GBP/USD (for signs of increased weakness).

It lost ground in today's trading, as the Balance of Power flipped to the Sellers, as shown on the following weekly chart.

Link to tweet

* UPDATE Nov. 3...

This is devastating news for the UK...coming from the Bank of England.

Perhaps that explains one of the the reasons that the GBP/USD has struggled to gain sustained traction on direction, since it hit its record low of 1.0384 on September 26...as it has experienced wild daily whipsaw swings on its attempted rally, since then.

N.B. Watch for signs of a contagion of weakness spreading to other countries and currencies.

Link to tweets & article

ITALY: Time For A Political Change...But Will That Prop Up Their Major Indices?

Since the financial crisis of 2008/09, Italy's Major Indices have had difficulty gaining sustained traction to accumulate and build on meaningful gains above their respective long-term major support levels (16,000 for the FTSE Italia All Share Index and 1,600 for the Investing.com Italy 40 Index). They've been, essentially, trading in a large and whippy sideways consolidation zone, since then.

So, perhaps a change of political landscape will ameliorate that, in due course.

We'll see how the final votes tally up in today's election -- potentially in favour of Italy's first female Prime Minister -- to swing the left-leaning government to a right-leaning one.

Until party leadership and party direction/agenda become known and more detailed, we may see some volatile trading in these markets (as well as the Euro, as noted in my post of September 24) for awhile.

 

Source: ZeroHedge

FedEx Volatility: Three Strikes And You're Out!

* See UPDATE below...

Following Thursday's after-hours dire world-wide recession warning by FedEx CEO, its stock (FDX) has plunged this morning.

FDX has a history of volatile parabolic spikes and plunges. In fact, it had difficulty, twice, in holding any gains above 120.00 since it broke above in September 2013, as shown on the following monthly chart. Price is heading back to that level for a third time, as I write this post.

A drop and hold below 120.00 could see it hit its next major support level of 80.00, or lower.

If this is a harbinger of things to come, it will confirm that world markets are in for a very rough ride (as I first reported on July 26 and later updates).

Source: ZeroHedge

ZeroHedge excerpt

Source: ZeroHedge

ZeroHedge excerpt

* UPDATE Sept. 19...

It seems to me that markets have 'levitated on myths' since Day One, especially since March 2009, in the weeks, months and years following the 2008/09 financial crisis.

Fed Chairman Powell can't fix the global supply chain crisis, so his rate-raising actions won't curb inflation entirely, but will contribute to the giant economic mess that countries around the world now find themselves trying to overcome.

People, especially those on fixed and low incomes (and even middle incomes), are in for a lot of pain...thanks to the artificial market and economic environment that global central bankers have created over many years.

In other words, visualize the proportionality of 'cause and effect' and you get the picture.

Cause...Effect?

Source: ZeroHedge

ZeroHedge excerpt

ZeroHedge excerpt

Abraham Maslow (Maslow's Hierarchy of Needs) would be rolling in his grave if he saw the state of things now. 

Most people (99%) around the world are still struggling in the bottom two levels of the Hierarchy.

So much for so-called 'personal progress' over the centuries! 🤔

Maslow's Hierarchy of Needs