When using charts for options trading and any kind of trading, it is a good idea to look at various time frames to be sure you have a solid understanding for the longer term trends in play. It’s easy to get caught up in trading the short time frames like the one, 10, and 60 minute charts, especially when there are large intraday movements. But be careful to always look at the bigger picture.
Below are weekly and daily charts which I think offer a big picture view of things. In both 2009 and 2010 we saw a 5% — 8% correction down to the key moving averages. I feel that we are in store for a similar pullback this year. After that we will most likely continue higher.
S&P 500 Index
US Dollar Index – Weekly Chart
The dollar is trading down at a key support level. If we get a close below this trend line then we should see the dollar sell off sharply which in turn will trigger another leg higher in commodities across the board.
US Dollar Index Futures
Gold – Daily Chart
Both gold and silver have made new highs but after such a run I expect we see a quick pullback before they go higher. Gold and silver are two investments that everyone should hold as a core position for the long run. But, if we do get a nice quick pullback into the key moving averages then I think it’s a great spot to get involved with more money.
Gold Futures
Mid-Week Trend Report:
In short, I am bullish on stocks and commodities and bearish on the dollar and bonds. Going forward — if the dollar breaks down it will most likely help boost oil prices which in turn puts downward pressure on stocks. Depending on how things unfold in the Middle East and a falling dollar, we may not see higher stock prices. Some are forecasting $150 — $220 per barrel and I know if it gets back up there it will definitely slow the economy and stock prices down.
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