What's Next for the Dollar
The market oozed
higher yesterday on meaningless volume. Although to the bulls credit, the
positive session yesterday occurred despite a miss from: CPI, core CPI,
initial claims, continuing claims and leading indicators.
Other than those misses, the economic data was great yesterday -
Philadelphia Fed beat 21 expectations and recorded 35.9. The bulls only
needed a little bit of optimism from an obscure indicator to move the
market 0.25% higher.
In spite of the blow out Philly Fed data, the bulls got most of
their help yesterday with a decline from the dollar. TradeMaster
subscribers have been using this
chart of the dollar for over a year.
The long term chart of the dollar has come in handy a few times -
more recently in October. The chart cautioned us to be more bullish than
bearish on the dollar. And the dollar rallied from $75 to $81 by
December. Similarly, the chart is giving us the same caution now.
With turmoil in the Middle East near Saudi Arabia driving oil,
continued strife in Europe with concerns rising about Portugal and the
ever present political tension in Asia - the currency market should
continue to be highly volatile in 2011. The dollar should be extra
volatile as fiscal concerns in the U.S. and budget cuts from the States
take over the media.
The $75.50-$76.50 area remains must hold support.
From a long term viewpoint, you should become bullish on the dollar
unless that price area is broken. While over the next six months I expect
the dollar will be mostly higher, and should attempt to get back to $89,
over the next few weeks it may sink. As such, I have positioned myself
(ended short yen) bullish on the euro.
Our long term charts favor a bullish dollar, but we trade in the
near term, and those charts signal dollar frailty. And it's always
possible our long-term chart of the dollar breaks to the downside.
While TradeMaster
is not a forex service, we can trade a declining dollar with stocks. The
best way to do this is through commodities, or miners of commodities.
Gold, platinum and silver are the best pure commodity trades to
make.
From the miner side, I recommend you trade oil and gold miners. The
past few weekend videos have dived into dozens of miner trades. We took
one of those (a less risky stock) yesterday. Shares of ANR were picked up
after they confirmed a break out beyond $29. I expect the stock to
continue higher to $34.50 over the next month. But if you want additional
risk, watch the video HERE
on ALJ, PDC, BPZ, ANV, ATW, PTEN and THM.
The TradeMaster portfolio currently holds ANV with a
$34.50 target and BPZ with a $7.50 price target. Additionally, we had
previously owned shares of ALJ, which were sold on 2/14 for nearly 50%
gains.
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