Crude oil, gold, you name it, nearly all commodities are presently in a severe bear market, and are trading near multi-year lows. The weakness has been made much worse by an ever appreciating US Dollar. The US Dollar rally is already 13 months old and is slated by pundits to rally for many years to come, if not infinity. There is a hysterical belief that the US Dollar can only go one way, and that is higher against virtually every other currency in the world.
As a contrarian, not only am I not convinced that the US Dollar strength is infallible, but I am looking for a downturn of 10 to 20% in the value of the US Dollar to begin almost immediately. You must now think that I am totally nuts! With the impending rate hike cycle to begin in September 2015, with an additional rate hike expected in December 2015, the US Dollar can only go higher. Well, I wish they would get busy and raise rates early and often. Delaying the raising of rates has only allowed the markets extra time to raise the value of the US Dollar to dizzying heights. The rate increase for 2015 and many years in the future, have already been priced in....not once, but several times over. I say this emphatically as a truth. The US Dollar is DOA, "Dead On Arrival".
I am looking for the US Dollar to top out as early as this coming Monday, August 10, 2015. History is on my side. Not only is a 6 week bullish seasonal for the Canadian Dollar to begin that same day, but both gold and crude oil are overdue for a seasonal upturn.
Just click here to read this article from Sam Ro of the Business Insider. He explains that after the first rate hike, in the last five tightening cycles, the US Dollar weakened by around 10% over the following 3 months. The current rally is so overdone, and sentiment is so ridiculously one-sided, unlike the 10% historical corrections of the past, I would not be surprised to see a drop of 20% or more by the end of the year. Just thought it was time that a different view was posted, just for the record. Not everyone is a lemming who blindly follows the crowd and "group think".
The thoughts and opinions in this article, along with all STOCKTALK posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.