After falling for four straight months, the US dollar index $DXY is up three days in a row. Whether the near-term dollar strength turns into a more sustained trend is anyone’s guess.
Regardless, risk assets feel the pressure as many areas begin to correct, including precious metals.
Despite this recent selling pressure, we have clear levels to trade against when it comes to Silver and mining stocks.
Forget about what Powell said or whatever you heard on the street.
We’re still looking for risk assets to buy.
That includes stocks and commodities. Despite the dollar applying downside pressure to risk assets this morning, I want to share one commodity that looks ready to rip…
Check out the weekly chart of Cotton futures:
Cotton experienced a sharp decline last year following an impressive run-up off the 2020 lows. Fast forward to today, and it’s challenging a critical retracement level from below at approximately 89.
The bulls have hammered this level since October of last year. And the way I learned it…
The more times a level is tested, the higher the likelihood it breaks.
To be clear, I don’t care what he said. Instead of hanging on the Fed Chair's words, I prefer to focus on the markets. I find it more enjoyable.
But, boy, did markets respond!
The most striking aspect of yesterday’s reaction was highlighted by the relative strength of growth stocks.
Check out the overlay chart of the US T-Bond ETF $TLT and the ARK Innovation ETF $ARKK: These charts tend to move tick-for-tick, as long-duration assets benefit from the same market environment.
The near-term direction of US interest rates will play a major role in how market conditions resolve in the coming weeks. This is a chart you want to monitor closely...
