VantagePoint AI Market Outlook for the Week of December 9th, 2019
The VantagePoint AI Market Outlook is designed to help traders. It’s important to remain aware of correlations in the global markets. Traders can become more profitable if they know how to get ahead of the trends. Utilizing the predictive indicators in VantagePoint Software can help traders find the right trades and the right times. Above all, traders know when to enter and exit those trades for maximum profit. Let’s look at the charts for Equities, Commodities, and Forex Pairs.
Hello everyone, and welcome back. My name is Greg Firman and this is the VantagePoint AI Market Outlook for the week of December the 9th, 2019.
U.S Dollar Index
Now, to get started this week, we’re going to begin again with the US dollar index, but we will be covering all the major markets. Now, the dollar’s starting to reverse yet again on a very, very strong non-farm payroll number. We’ve got a U6 number that’s moved lower. We’ve got the previous months were revised higher. Plus, the 80P report was suggesting and I think the Street was suggesting around 100K. They came in around 220 but again, those other previous two months were revised upwards. So I think at this point in time we really have to start taking the ADP report with a grain of salt because it really has been a very poor indicator as of late as to what this number actually is.
So with that said, I’ve seen very strong numbers like this in the past guys, but what I can tell you is after the non-farm payroll, in most cases the dollar sells off towards the latter part of the week, either way. Now we are in the month of December and that will change things here to be clear. So again, you’ve got a number of different countries year-end, they’re closing up their books. People will be going on vacation really anything after about December the 15th. There’s very thin illiquid markets here, so when we look at the dollar, we’ve recovered off this verified support zone, but we’re stalling at 97.42. Above that just below, excuse me, that T-cross long at 97.42. The indicators in the VantagePoint software are slowly rolling back over to the long side, but this is not a strong signal by any means.
The first major target we would have to get above is 97.42. If we look at our predicted moving average on its own, we’ve come up and closed just below that at 97.24, that long-predicted at 97.27. Now with that recovery in the dollar, that also points to a recovery inequities. Now we haven’t made a new high this past week. But we are recovering again off the verified zone that I warned everybody about last week. We got the sell-off we were looking for, a very substantial sell-off here too by the way. Almost 100 full points on the S&P 500 from last week’s weekly outlook. Now the question is with that strong economic data, I think it’s safe to say that the US is not going into a recession at this particular time. Now that brings us to some very heavy event risk on Wednesday with the FLMC.
They are going to comment on this latest jobs report, and it certainly does not warrant any rate cuts of any kind. In my respectful opinion, I’ve been one of the strong advocates that not only should they not be cut, maybe they should be hiking. So I’m sure it’s going to be a very, very interesting week. But it’s going to be a very choppy, volatile week because we also have the ECB. So the European Central Bank has a new chair, Lagarde. We don’t know what she’s going to do, so expect a lot of volatility in the latter part of the week towards Wednesday, Thursday and Friday.
S&P 500 / VIX Index
Now with the S&P 500, with that recovery, one of the leading indicators for the S&P 500 also here that I’ve been monitoring is, of course, the VIX. Now the VIX is hit a very powerful verified resistance sown at 17.22. You can see here just under that, and we failed. Now on a rising VIX that would tell us that the equity markets are going to sell off so we couldn’t complete that signal, but the indicators are still very mixed here.
Now we’ve got the support zone on the VIX where that’s going to come in at or about the low, coming in about 13.75. We’re going to be watching this area very, very closely. I’m going to highlight it here so you guys can see it. This major support sitting down here is something. If we break down below that, that would indicate that the S&P 500 is going to go considerably higher into the year-end. But again, only a break of this level on the VIX will that happen. So keep a close eye on that.
Now with gold going into next week, gold obviously is going to come under a little bit of pressure now because of that non-farm payroll number. Now, this is what it’s like trading the news guys. If you actually believe that ADP report, in that ADP report, even if the jobs number came in at like 130, 140, 120, and the previous two months were continuing to be revised down, then that would’ve easily put gold above the 1,500 mark. But even with that very strong payroll number, gold is still holding within a very tight range here, and this is what we have to take notice of in this little channel right there.
But again, we don’t have a China deal. There’s more noise about that. But at this particular time, gold remains a buy and a dip here guys, at least for now. The only thing that now changes the perspective of that particular trade, is where do we go here? What is the fed going to say on Wednesday? Are they going to take that data as positive for the economy, or they going to say that’s a one-off anomaly, and we’re going to return to lower employment numbers starting into the new year? Again, the fed can completely dismantle any kind of dollar rally in order to boost those equity markets up.
If that’s the case, then gold will rise. Now with that rise in the equities, oil is turned around, but once again, we’re stuck just above this 58.70, 58.90. Now, a lot of times what you will see, whenever we break above a major resistance zone like this at 58.68, we break above it for a day or two, and this is a classic bull trap. I’m not saying is a bull trap. I’m saying you have to be careful of that because every time we’ve come up here we’ve failed. So if the equity markets advanced, then we will see oil also advanced.
But my optimism on that again remains heavily guarded going into year-end, because demand for oil is still rather low. Now you’ve got a lot of noise around this move in oil too with the OPEC meetings this week. So again, take it with a grain of salt. But I wouldn’t anticipate any major rally in oil, not just yet anyway. I’ll continue to monitor it, but again, I don’t think we want to buy into this just yet because OPEC obviously wants to get oil prices up and in this particular case, I don’t think they’re going to be successful.
Euro/U.S. Dollar (EUR/USD)
Now with the Euro, the Euro has made an advancement again, banking on that weaker non-farm payroll number, some of the weaker data out of the US. But again the very second, basically within an hour of that non-farm payroll number being a complete miss from the ADP report. Down goes the Euro. Now we’re holding at 1.1055, that’s our T-cross long. The indicators, however are starting to turn lower. But again, we have to hear what the new ECB, European central bank chair is going to say on Thursday. That could be, I get the feeling that could actually boost the Euro.
So be careful with the Euro between now and Thursday, but again, we’ve got very strong support down here at this low 1.0981. I would anticipate at least a test of that, by mid to latter part of this week. But what if we’re going to see the buyers come in, that’s likely where it’s going to be. So we’ll continue to monitor the VantagePoint indicators where the RSI is still sitting at 51.5. Our MACD still looks okay, but our predicted differences are struggling a little bit here. But again, to start the week, what we’ll do is we look at, I always give you guys a key pivot area, 1.1066. If we can get back up above 1.1066, close above that area, then loans are still very much viable.
But if we’re closing below this level by the end of trading on Tuesday, then that is a bearer signal. So keep an eye on this area at 1.1066 and we’ll see which way the Euro moves. But the market has to digest that payroll number, and again, in my respectful opinion, there was not one bad thing in that employment report. The average hourly earnings are up, the U6 is down, the previous months are being revised up. The main headline U3 number is very strong, and we’re in the month of December. So down is up, up is down here guys. But again, watch that main level.
U.S. Dollar/Swiss Franc (USD/CHF) / U.S. Dollar/Japanese Yen (USD/JPY)
Now with the US-Swiss Franc and the dollar Yen as I’ve talked about, they are very, very similar trades here. Guys, the US-Swiss Franc getting killed this week. As I was talking about in last week’s weekly, I looked at if the equity market sell-off comes to fruition, it’s going to take dollar Yen and US-Swiss Frank down with it. That is exactly what happened. So these global Intermarket correlations are incredibly important. So going into this week 0.9925, our T-cross long, is our big reversal. If we can get above that and stay above that, it’s got a shot to move higher. But again, when we look at the indicators they are trying to roll over long here, our neural index is the first indicator to go off changing from red to green. Our pink line, which is our medium-term trend against our longer-term trend, there is not a buy signal there yet, but I would not disagree that one could be forming here.
But it will be determined by, for example, the S&P 500. If it moves higher, it’s taking this particular pair with it. That would also apply to the dollar Yen. I often hear this, people are saying, “Well, I’m short US-Swiss Frank and I’m long dollar Yen.” That’s not two trades you ever want to hold at the same time. Guys, they’re virtually the same trade. They’re running off the global risk-on or risk-off. So if risk comes back on, then dollar Yen and US-Swiss Frank will move higher. But as we can see in the VantagePoint software, surprisingly, it’s holding firm and saying that the dollar Yen is going lower and ignoring that payroll number.
So it will be a very interesting week next week. The level that I would like to see you guys keeping your eye on, is down here around 108.43 and this very substantial support at 108.24. I would even argue we have a third one sitting at 107.89. Now we’ve had a big push on dollar Yen this week. We’ve enjoyed some very good short trades on this one. Let’s take a step back here and how the market’s going to react, how the S&P 500 is going to react, because it will dictate what happens with these two particular pairs. But right now, our RSI indicator again is getting a little bit oversold at 28.5. But as I’ve often mentioned here, guys, that an overbought or oversold signal has on average less than 50% chance of being accurate.
Meaning that if you’re buying something because it’s oversold, statistically speaking, that is not a good way to trade here, guys. A less than 50% probability on any of those types of signals. You’re basically fighting the market and telling them that the market is oversold and it should go higher. So again, we’ve got to be very, very cautious. I’m not saying it doesn’t work, I’m saying we have to be very careful.
British Pound/U.S. Dollar (GBP/USD)
Now with the pound dollar last week, another very good week for the pound, but again, we’re coming into a very strong verified resistance zone. As you can see, it looks like the UK election’s going to be a slam dunk for old Boris there, we’ll see about that. That is generating interest in the pound. But once again here guys, when we look at the indicators from VantagePoint, a very ominous signal begins to form here.
The medium-term crossing, the longterm predicted difference, if this signal completes with the neural index turning from green to red, and if we look at our predicted RSI at 89.2, this suggests that the pound may not advance from this particular point. But it doesn’t mean it’s a trend reversal either. It means the natural state of things which has absolutely nothing to do with Fibonacci here, or any of these things, the market, you’re running out of buyers up here potentially. So a natural retracement is again, a natural thing. So 1.2968, the T-cross long and the additional area you want to watch here is our predicted moving average, that’s coming in at 1.3065. If we lose 1.3065, I can almost guarantee you we are going to test that level before Tuesday or Wednesday, and then we want to see if it can hold we would remain buyers off that. But I anticipate a minor corrective move lower before the pound makes its next move higher. So I’ll be watching these indicators in this particular trade set up very, very closely.
U.S. Dollar / Canadian Dollar (USD/CAD)
Now with the US Canadian pair, again, the Canadian elections are now over. Unfortunately, Mr. Trudeau was reelected. Well fortunately or unfortunately, depending on whether you’re a trader of the Canadian dollar. Once again, the absolute disastrous job numbers that came out of Canada on Friday were just horrible.
A miss by 71K jobs lost, and the unemployment rate going from I believe 5.5 to 5.9. Something along that line. But just a horrific number. Plus the previous two months revised down, not up. So it looks like the Canadian jobs report took the brunt of what the US jobs report was supposed to take. So not surprisingly, US Canada has completely reversed higher. Now we do want to see the Canadian dollar closing above 1.3255. We’ve closed 1.3248, but again, if you’re using your VantagePoint software, you’ll see the long-predicted here, this pivot of 1.3252, there’s a lot of resistance sitting here guys.
So we’ve got to clear that and start moving up. If we have a shot, another shot of hitting 1.3321 or higher, when we look at the seasonality on the Canadian dollar, just using that blue line, you can see that last year at this time the Canadian dollar did not fare very well at all. In fact, it took the brunt of its losses last year at this particular time and that basically went on to, I would say, well, into January at least, into the beginning of January. So this is a known period of Canadian dollar weakness and based around the seasonality, but the actual employment numbers on Friday could be the nail in the coffin for the Canadian dollar here across the board.
So we’ll continue to monitor this right now we have very, very good verified support down here, which we came into. That’s around the 1.3190 area that I talked about last week. We pierced that slightly, and once again a classic bear trap. They get you going short below 1.3190, only to turn around and reverse and take out all of the stops. So watch this one, be careful with this one. The Canadian dollar is notorious guys, for reversing whatever it does on Monday, it very often reverses on Tuesday, price, so be careful of that.
Australian Dollar/U.S. Dollar (AUD/USD) & New Zealand Dollar/U.S. Dollar (NZD/USD)
Now as we move into our final two currency pairs, Australia US, and New Zealand US very, very similar trades. If the equity markets rally, very important what I’m going to say here to help you guys along with directed or market correlations, that what we’ve seen as of late is that if the equity markets rally, that has not been good for the Ozzie or New Zealand. It’s been a little bit better for New Zealand than the Ozzie. But this past week with a relatively strong rally in the equity markets, or the initial selloff until Wednesday, that actually fueled a rally up in the Aussie dollar and the New Zealand dollar.
So it would be safe to say that if the equity markets sell-off again next week, then again Ozzy would rise. But if the equity markets continue to move higher, that may send the Ozzy and the New Zealand lower. Keep a very close eye on this verified zone at 0.6862. That’s the level we want to watch right now. Can we break through that? If we break through that level, then we have a real shot at targeting the previous high at 0.6928. But there is a lot of resistance up here. The indicators from VantagePoint are starting to turn sideways. They’re not putting out a cell just yet. Now one way to determine when something is going to reverse, you can see how the market is hugging this VantagePoint predicted moving average. That level now is 0.6828. If we close down below this level, that would suggest that’s going to trigger a short again, so watch 0.6828 very closely.
The New Zealand dollar has a very similar setup here, guys. We’ve got a big push away from the T-cross long at 0.6456. The further we push away from that, the more likely we’re going to go back to it. You can see that if I zoom in on the charts here to a one-month time frame, we actually have the medium-term crossing the longterm predicted difference, right here. It’s gone off, which I will point and this video is being recorded on Saturday morning. So I can’t go back and change what I’m going to say here, is that eight out of 10 times when the medium-term crosses at the longterm predicted difference, it tells me whatever that current move is, it’s getting close to exhaustion. And that is not based on overbought or oversold. That’s a medium-term trend weakening against the longer-term trend, so if nothing else, I’m taking note of this that maybe it’s not such a good idea to apply this thing up here.
If you look at this, bring the verified zones into this, we can see that we have a very big verified zone at 0.6586, and that’s exactly where we’re failing. So again, 0.6586, be very cautious around this particular area. We’re closing at 0.6564, there may be a very good short rate off the get-go here, guys. But the main thing is whether the medium-term crossing the longterm predicted differences, it’s not about being right or wrong, it’s identifying a reversal signal, and it’s been a very steep climb on this particular pair. Usually, when I get a very stiff move like this on a commodity currency, it very often reverses.
So with that said, this is the VantagePoint AI market outlook for the week of December the 9th, 2019.