Presidential Election day trading – Dollar index looses strength on weak selling volume.
During this Presidential Election day trading will see a lot of volatility as the underlying strength of the bonds market and the impotency of the Federal Reserve becomes more apparent. Remember the Federal Reserve is an un audited private banking cartel running the US money supply.
Here is the first area this week we shall see Presidential Election Day trading in effect: US Dollar index.
We shall see:
Euro Strengthen, Gold will take off, Silver will take off, Oil could strengthen, Bonds will continue selling off or will take a breather, S&P500 will challenge support at 2100 or dip below.
The critical support for the move down will be at 97.40, if buyers don’t defend here then the move will be to 96.38 on the 50MA.
Remember we are going into the election so I am expecting to see a bit of volatility, then consolidated price action.
The gold market spiked up this morning from the open as the dollar index plummeted in the overnight session. Gold has a firm support at the $1250 level with an upside target the 50MA at 1302. Gold tested under the 200MA and then reject prices under 1260.
Remember gold is very volatile and can have a large swing that is not relative to underlying dollar valuations. Gold is not a risk off trade in the market place. It is a catastrophe hedge. Institutional trading does not hedge with Gold because of this volatility and the leverage in the futures market. Institutional players like Banks, and some governments have been accused of open manipulation and few have paid fines because of it.
Upside targets 1302 then 1320-4.
The question is What will happen to gold when Hillary is voted in? We will see what the charts say as we are closer to the November 8 election date. So far it looks like business as usual with pull back in the markets (S&P500) and sell off in bonds and then strength in Gold because of the uncertainty of Trump getting in or not. The institutions are looking at this volatility and price adjustment as a way to leverage into new positions for the next run in either direction.
The biggest victim will probably be swing traders and position traders in the stock markets. Watch for the S&P500 to break 2100 and then resurface on some type of news. Watching for a downside target of 2050 which is the weekly 50MA. Observe the previous swing down noted by the red arrow. This move was around the 70 point range, if we see the same volatility this week we could get to the 50MA easily. Sellers could move into this market quickly and gain control of direction. Money Maker Edge traders are selling the rallies until we see signs of turning around. If you are not familiar with volatile markets it is best to stay out.
The markets are one of the biggest “Fear Factors” for swaying public opinion as the public sees them as the bellwether of the economy. Unfortunately, with the Fed’s use of Dark pools (which can not be proven because they are un-audited) we will see our markets being bought at key levels as volatility ensues.
Remember, we have a December Fed meeting where there is also a possibility of interest rates being pushed up a quarter of one percent. So, the picture is for quite a bit of volatility.