Intermarket Analysis

The following is just a small excerpt from my latest Weekly Strategy Session (please click on that hyperlink for details about trying it out). which I published for members and 12631 subscribers this past Sunday. 

Intermarket Analysis, Part I. 

To update our analysis of the U.S. Dollar ETF weekly chart, you can see the greenback retraced back up to the scene of its big breakdown from September, only to be met with expected overhead supply there. The presumption is still that the downtrend in the Dollar will persist, overwhelming bulls unless and until they can get back (and hold) inside the violated multi-year pennant (light blue lines).

Of course, a weak Dollar would typically mean strong commodities, and vice versa. Updating the crude oil ETF, you can see that the USO found initial support after the Iran deal at its summer lows of $33. This represents a good level against which traders can play a counter-trend long, meaning a protective stop-loss belongs not far below that level. UCO is a levered long ETF for crude. Further Dollar weakness would likely help crude longs.

Natural gas has seen a very strong rally off a potential double-bottom in recent weeks. In order to wholly confirm the double-bottom for much higher prices, though, the UNG ETF would need to close above $19.80, denoted on the daily chart below.

In the meantime, I am looking to see how the recent rally is consolidated. If we see an orderly bull flag, perhaps filling out the purple lines I have drawn, I am looking at another stab at the UGAZ (tripled-levered long ETF for natural has) as a means to aggressively play further upside.

Please click here to continue reading