The Week Ahead

The charts are not simple in this area.

It looks like Gold will move higher, but whether this is a temporary bounce as we initially saw before a wider pullback is now up in the air as gold now seems to be discounting inflation expectations which could continue sending it higher.

I haven't changed the forecast for crude, a pullback followed by a stronger move up.

One of the things that seems to stand out the most is the Igloo/Chimney top and reversal process.

We have the Igloo top in place, the last head fake move or Chimney looks like it will take place next week, beyond that everything starts turning very negative. My interpretation is that we will get a head fake move, this is where we should have good entries in assets we have been waiting on for signals like NFLX , perhaps transports, Financials almost for sure.

It seems to me that soon after the $USD counter trend bounce may start to fail. While there are some positive Euro signals that would naturally come with a $USD decline, the strongest currency signals are for the Yen to strengthen, meaning the USD/JPY declining, this is the clearest signal I have seen that the carry trade unwind that the bouncing dollar has fascilliateated at smaller or no losses should being to unravel again and that makes sense as the head fake chimney move in the market/equities would be in the exact right place for the start of a $USD decline from the counter trend bounce and the selling of carry assets like stocks and bonds. It still looks like bonds will see a pullback and I'm still thinking a counter trend bounce, but these need to be watched carefully as it seems difficult to pull off a counter trend bounce if the carry trade unwind starts to resume later in the week.

Therefore I'm looking for the chimney on the igloo tops I showed in the last post, that's also the entries for numerous trades we have been patiently waiting for to set up. I think the switch from a head fake bounce in equities to a sharp decline will be a very fast one so I wouldn't expect the same lazy market we have sen this week.

I'll add more color after the close.