VantagePoint AI Market Outlook for the Week of November 11th, 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 Vantage Point AI Market Outlook for the week of November the 11, 2019.
U.S Dollar Index
Now to get started this week, we’re going to begin where we always do with that very important US dollar index, we can see that it’s… very, very good week to be buying dollars last week, as I had talked about in last week’s weekly Outlook that we usually look for the dollar to weaken at the end of the first week of the new month after the non-farm payroll. So we could see further dollar strength here, but again, the conditions are not ideal. When we look at the previous sell-off on the dollar, we can see that it’s usually around the exact same time, October the 8th here, and we can see it again over here on September the 12th. There’s some consistency in this particular signal regardless of what’s going on in the market.
Now, a lot of things are still very much unresolved with this trade, with the trade tariffs between the US and China. And again guys, I’m not convinced that the dollar is going to benefit much more from this or the equity markets, or oil for that matter also. So we’ve got to look at all of these particular factors. Right now the dollar is in a very clear overbought condition at 83.70, but the MACD still has not crossed the zero line and our predicted difference’s also heavily overbought. So again, when we look at that and we compare it to the time and the month, the question is now is the demand for the dollars going to exhaust and are we going to see the dollar move lower?
Now, in my respectful opinion, when we look closer at this, we can see where the dollar is getting its strength from. It’s getting strength from the equity markets. As the S&P 500 moves higher, the dollar is absolutely following it. That is a very clear inner market correlation that I’ve repeatedly identified. So if there’s any hiccup in the, excuse me, in the equity markets globally, not just the S&P 500, but globally, that is what will likely, believe it or not, send the dollar lower and the Euro higher. We’ve seen the Euro come under significant selling pressure this week and again that’s because we have stocks moving higher.
Light Sweet Crude Oil
Now, when I’m looking at Light Sweet Crude Oil, we can see that Light Sweet Crude Oil also is following the equity markets and the dollar higher, but they’re not breaking out past… The equity markets are struggling anywhere above $57 a barrel. We’ve hit almost $58 and then it backs off. We’re holding the line here, but a very, very weak buy signal on oil. It’s not overly strong at this particular time, but I believe that oil has really got a boost from the S&P 500.
S&P 500 (continued)
Now, again, when we look at the conditions in the S&P 500, the one thing that has been pointed out to me and that I’ve made note of is that a lot of these particular… this rally in the S&P 500 is based on very, very low volume. If we look at the VantagePoint indicators, when we bring up price and then we actually look at the volume and the S&P 500, you can see that it’s actually very low. We’re in a heavily, heavily overbought condition and it still keeps trying to go higher, but again, for all the wrong reasons, earnings are mediocre at best. Demand for equities, well there’s demand as long as everything is good, but is this a buy the rumor, sell the fact, everything that we’re seeing with the US and China? I believe it is.
But again, a number of major banks this past week have been very clear about their positions. Wells Fargo and I believe also JP Morgan where they have stated very clearly they are not putting any new money to work at these particular levels. So they’re very… We could call it the wall of worry, we can call it a number of different things, but again, it doesn’t appear to be a true rally just yet. But again, we’ll continue to monitor this. That’s the best we can do.
When we look at gold, gold finally pushed lower on this big push up on the S&P 500. But, once again, you can see that we’re holding this support down here around this 1460.00, very stubborn. So any kind of reversal on the S&P 500 and the US dollar, we will immediately see gold rise or continue its very, very strong uptrend in 2019. If we look at gold on a year over year basis, you’d be crazy not to be buying gold in 2019. It’s been a fantastic trade up, over 20% on the year. So a pullback is perfectly normal. But, again, we’re going to watch the equity markets very closely to see where we go from here because that will indirectly determine what happens with gold also, or vice versa.
Euro/U.S. Dollar (EUR/USD)
Now as we get into our main currencies going into next week, starting with the Euro/US pair. The Euro, again, struggling to make any break above the area that I discussed in last week’s Forex Weekly Outlook. This 1.1170 area up to the 112 is just provided too much resistance and the Euro is breaking down. But once again here guys, if we look at the Euro and we look at the cycles when the dollar usually sells off, the Euro immediately benefits from that.
So when I’m looking at this, I’m seeing an RSI at 16.2. Our predicted differences are starting to bottom out here and we’ve got very, very strong additional support at this 1.0991 area. Now it looks like we’re going to try and move to that area, but I would be very, very cautious about shorting down around this 1.1000 area, 1.0990. We can see the last rally on the Euro was on October the 10th, which coincides what I’ve shown you guys about how the dollar is weak at the end of the first week of the month after the non-farm payroll. But, again, just to reiterate that this was a funny month because November 1st fell on a Friday, so theoretically this week, this past week is the end of the first week of the new month. Now we also have a holiday on Monday. We have Veterans Day, so we’re going to see some illiquid markets on Monday.
Don’t fall for a fake price. If we get a big push down on the Euro here, be careful anywhere down in this area between the 1.0941 and 1.090 that’s where I feel the buyers are likely to come back in. And then when they come back in, we should see gold start to move back up and the S&P 500 and the dollar start to ease. I’m not saying we’re going to completely reverse the move on the dollar and the S&P, but we should see it back off a little bit going into next week.
U.S. Dollar/Swiss Franc (USD/CHF)
Now, as we look at the US/Swiss Franc, again this past rally in the S&P 500 is very confusing for a number of different reasons. When we look at the US/Swiss Franc, this is a risk on the trade. If the S&P 500 is going higher, so is US/Swiss Franc. You can see that it is going higher but well within the same range. We’ve got the lower bottom end of this particular range, which we didn’t even get to the bottom of down around 0.9850. And the upper end of this particular range starts at the 0.9970 area.
So, again, when we look at the overall depreciation of the US Dollar against the weakest currency in the Forex market, the Swiss Franc, because of the interest rates, then you would think that this particular pair would at least be above parody, but it’s not. So it tells me that the current move on the S&P 500 may not be what it appears to be and we should still look to sell rallies. But I would hold off a little bit on this. Let’s see if we can get above parody and then we’ll go from there.
British Pound/U.S. Dollar (GBP/USD)
Now when we look at the Pound/Dollar, Pound/Dollar under pressure, again for a number of different reasons. We’ve got the verified zone up here, we’ve tested it, we are failing. But once again, this is the UK election. You’ve got the Bank of England, a number of different factors here guys. But when we’re looking at momentum in our trading, we’re at 22.9. So I’m not sure how much more downside we’re going to see here, particularly when we’re coming into a period of known US Dollar weakness. So we’ll keep an eye on this one right now. But, again, we’re looking at that critical VP level, 1.2808. If we can retake, get back up above 1.2808 in the early part of the week by Wednesday, it’s more likely than not this particular pair is going to reverse. And again, we’re going to watch those main indicators in our VantagePoint software. Our Neural Index when it turns green, the RSI starts turning back up. That should be a clear indication to look to start getting long again.
U.S. Dollar/Japanese Yen (USD/JPY)
Now with the Dollar/Yen, the Dollar/Yen has come up and tested a very significant resistance level at 1.0928. But once again here guys, with the S&P 500 at almost 3,100, the Dollar/Yen refuses to go higher. That’s just a fact. That’s not me saying it here guys. That’s the market saying we are unwilling to buy the Dollar/Yen at this particular price. There is substantial resistance in this particular area. When we go back for six months, we can see the resistance is even stronger. If we can manage to get up into this high around 1.0993. So if you are shorting it like me, make sure that your stops are well above 1010. Do not get tagged out in these verified zones.
U.S. Dollar/ Canadian Dollar
Now as we look at our are three main commodity currencies going into next week, the CAD is pushed higher. Once again here guys, this move is not consistent with the Intermarket correlations we know. Whenever the equity markets go screaming higher, there are three currencies that tend to follow it, the CAD, the Aussie, New Zealand, and we see considerable weakness in the Yen and the Swiss Franc. It’s a very different picture here guys in the month of November, so we want to monitor this very closely. But if we can stay above our current verified zone, which is coming in at or about approximately, once again about the 1.3208 area. If we can stay above that, we may be able to get back up here towards the 1.3345 area, but I think the sellers are going to come out before then guys on overall US Dollar weakness or at least on a corrective move on the dollar weaker.
Now, the last couple of weeks have been very strong weeks for buying. You certainly don’t want to be short the dollar in the last couple of weeks unless you’re very specific on which pairs you’re targeting, right? So this one right now, the Canadian Unemployment Report, a little bit softer, that’s pushed this up a little bit, but it’s on a Friday, holiday thin markets knowing there’s a Canadian holiday and a US holiday on Monday. When the cat’s away, the mice will play here, right guys? So let’s take this one with a grain of salt. We do have the medium-term crossing the longterm predicted difference. In my respectful opinion when the Neural Index, if the Neural Index turns red in the next couple of days, that would be the trigger for us to look to get short here.
Australian Dollar/U.S. Dollar (AUD/USD) & New Zealand Dollar/U.S. Dollar (NZD/USD)
Now with Aussie/US and New Zealand/US, again, very confusing why the Aussie and New Zealand did not move higher this past week. They actually moved lower. That’s not consistent with the inner market correlations that we know. I talked about this level on the Aussie last week, this area around 0.6929 where… and the additional level that I also talked about was the 0.6894 area. Both levels we’ve broken both. Now we’re back on a key VantagePoint level. This is the number one way you want to interpret the software guys. When we look at this, 0.6854 is that critical VantagePoint T-cross long, a longer-term pivot area. We’re usually above it, we’re long below it. We’re short with a primary trend. But, again, the predicted differences are moving lower. The RSI, everything here says that or at least it appears, it looks like things are going lower, but if we cannot stay below 0.6854, then you do not want to short at this particular level. Okay, guys? If we’re going to look for longs, I would suggest that longs very well… are very likely to work down around the 0.6808 area.
But even right here between 0.6854 and 0.6801, if we can get the equity markets continuing to move higher, we could have a long trade here, but I believe that both the Aussie/US and its counterpart, which is, of course, New Zealand/US, which I’ll pull up now, both of these are warning us that the rally on the equity markets, there’s something a little off here. The main thing in trading that we want to understand here guys, as we look for these consistencies in the inner market correlations to help guide us on multiple different markets. When something happens in one market, it usually will spin-off to at least four or five others.
So with that said, this is the VantagePoint AI Market Outlook for the week of November 11, 2019.