Smart investors are accumulating cash, is what the USD chart tells us. Better pay attention here, because this is the chart that can (will?) create havoc in February of 2021. No, we are not talking another Corona crash. We are talking elevated volatility with good sell off days similar to what we saw in September and October last year. Longer term our bullish stock forecast and other bullish 2021 market calls remain valid. Short to medium term we believe we need to start protecting the downside as opposed to getting excited about the upside.
The chart featured in this article is the daily USD chart.
It starts looking really bullish on the medium term timeframe … and that is potentially bearish for risk assets like stocks.
This chart setup suggests that the bullish outcome of this reversal is about to start … any time as of NOW. Better don’t ignore this chart.
The large grey box represent the time period in which we believe the USD will be rising. In other words, if the small grey box is broken to the upside we believe the larger grey box will be dominant.
On January 7th, 2021 we saw the USD setting the bottom of its reversal. Surprise surprise, in the 72h that followed Jan 7th Bitcoin did set a major top. This is what we sent to our premium crypto members on New Year’s day, 7 days before it happened and without knowing that the USD would be setting a bottom of course:
Our best guess is BTC is accelerating its move higher now which is the last phase of its 3 month bullish cycle. We still believe that the higher probability scenario is that BTC and the entire crypto market is topping in the first week of January, the last Jan 7th, 2021. But we are open to admit that this is not an accurate assessment, and we continue to observe with an open mind if this is a different scenario playing out.
There is no coincidence in markets. And the USD will create havoc in February of 2021, presumably in all markets. The only unknown is the degree of damage it can create, and for how long it will last. We’ll get a handle on that in the next few weeks. For now, we’ll enjoy the party in stocks for as long as it lasts.
In our Momentum Investing portfolio we are starting to protect our profits by including exit targets to our positions. So far, our portfolio is strongly up in January of 2021, and we will ensure we will protect our profits especially as we look at below chart! Moreover, with some cash we will be able to open new positions at discounted levels. In our short term Trade Alerts portfolio we are waiting for our algo to flash a sell signal, and we have a refined method to maximize profits with any market direction.