Silver Price Prediction – Prices Whipsaw Following a Surge in Services

Silver prices whipsawed initially moving higher following a weaker than expected U.S. private payroll report. During this period the dollar moved lower and bong yields dropped. Later in the U.S. trading session, the ISM released a better than expected services report which reversed the trade weighing on the yellow metal and buoying the greenback. Copper prices moved lower but failed to weigh on silver.

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Technical analysis

Silver prices whipsawed but failed to gain traction.  Support is seen near the 10-day moving average at 25.27. Resistance is seen near the July highs at 25.80. Short-term momentum has flip-flopped, turning negative after turning positive on Tuesday as the fast stochastic generated a crossover sell signal.  Medium-term positive momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).

The U.S. Service Sector Remains Strong

According to the Institute of Supply Management, its non-manufacturing activity index surged to 64.1 in July, the highest reading in the series’ history, up 4-points from 60.1 in June. Expectations were for the index to edge higher to 60.5. The ISM survey’s measure of new orders increased to 63.7 from 62.1 in June. One key issue is that strong demand is continuing to strain supply chains. The survey’s measure of supplier deliveries rose to 72.0 from a reading of 68.5 in June. With bottlenecks in the supply chain persisting, input prices are rising.

When The Russell 2000 ETF (IWM) Reenters Price Flag Range – What’s Next For The US Markets?

Then, in March, the Russell 2000 peaked near $234.53 and entered a sideways Pennant/Flag formation/rotation. In June and July 2021, a moderate breakout/breakdown of that Pennant/Flat formation took place – resulting in price reentering the Pennant/Flag range near the Apex level. What does this mean for investors/traders?

IWM Rallies To Incredible Highs After November 2020 Elections

First, we want to highlight something very unusual related to the strength of the rally that took place after the November 2020 elections and into early 2021. There has only really been one example of any US major index reentering a bullish price phase that rallies so strong it reaches an early (post bottom) recovery trend strength – the peak in the markets in 1929. Take a look at the MAGENTA line on this IWM Weekly chart, below, to see what we are suggesting. The post-November 2020 rally in IWM was so strong, that price rallied over a 90 day period in excess of +64% – setting up an incredible excess phase rally/peak.

1929 DJIA Shows Similar Excess Phase Peak Setup

This long-term Dow Jones Industrial Average (DJIA) chart highlights one very interesting fact that we saw on the Russell 2000 chart above. Throughout history, the only time a rally phase has rallied above the initial bottom phase trend channel has been in 1929 – representing a major excess phase peak setup. This rally in 1929 continued to extend well beyond the upper trend-line level and eventually peaked after a series of two impressive price advances above the trend-line.

If the current IWM rally continues in this manner, we may expect to see one or two more attempts at a continued market rally. Each pushing the price of IWM ever higher in an attempt to identify a true peak value. Conversely, the IWM Pennant/Flag formation suggests some type of breakout or breakdown event is very likely over the next few weeks.

IWM Showing Signs Of Increased Volatility Near Flag Apex

This last chart shows how the current Pennant/Flag formation in IWM has reconfirmed with recent price action. The June/July price rotation, beyond the Flag ranges, suggests that increased volatility exists in the US markets as traders/investors digest the Q2:2021 earnings data/expectations and as the world continues to attempt to understand what the future of global economic normalcy will look like.

The fact that the Russell 2000 has moved back into the Pennant/Flag formation ranges recently and is very close to the Apex of this setup, suggests that the US/Global markets are no more than 2 to 4+ weeks away from a big breakout or breakdown event. My research team suggests key levels to watch on IWM are $234 (for a potential upside price breakout) and $208 (for a potential downside breakdown).

US Market Will Likely Cycle Into MoM/YoY Declines Through The Rest Of 2021 & Into 2022

It is our opinion that a broader market reversion event is very likely over the next 6+ months related to the post-COVID reflation trade recovery. The process of the markets, and economic indicators, reacting to the deep COVID market collapse acts in a “Dampening Sine Wave” pattern. Initially, after the deep COVID-19 market collapse, the recovery of the markets will prompt seemingly extreme bullish monthly and quarterly expectations/results. This is because the month-over-month and year-over-year results are factoring in the extremely deeply depressed COVID-19 collapse event.

Over time, possibly more than 24 to 36 months, these levels will rotate upward and downward toward a more normal type of result. I’ve included an example of a Dampening Sine Wave similar to what I expect to happen post-COVID below.

Stay prepared for big market trends and a shift in how economic data is reported over the next 14+ months. If the markets shift, as we are expecting, a broad market stagnation or decline is likely over the next 8 to 12+ months. The extreme cycle phases that have been prompted since the COVID-19 market collapse are likely to result in a continued “Dampening Sine Wave” cycle that will eventually result in more normal types of market activity.

If another COVID event takes place before the end of 2021, resulting in any new type of lock-down or economic restrictions, the current down-wave cycle of the Dampening Sine Wave (above) will be amplified in scope. Thus, a potential deeper subsequent secondary down-wave cycle may take place – setting up another big upside recovery wave in the future.

We live in interesting times and it is important for traders/investors to learn to recognize the mechanics of what we are living through. There will come a time where the markets move in a more normalized manner – but that time is likely 5 to 6+ years away.

More than ever, right now, traders need to move away from risk functions and start using common sense. There will still be endless opportunities for profits from these extended price rotations, but the volatility and leverage factors will increase risk levels for traders that are not prepared or don’t have solid strategies. Don’t let yourself get caught in these next cycle phases unprepared.

Please take a minute to learn about my BAN Trader Pro newsletter service and how it can help you identify and trade better sector setups. My team and I have built this strategy to help us identify the strongest and best trade setups in any market sector. Every day, we deliver these setups to our subscribers along with the BAN Trader Pro system trades. You owe it to yourself to see how simple it is to trade 30% to 40% of the time to generate incredible results.

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For a look at all of today’s economic events, check out our economic calendar.

Have a great day!

Chris Vermeulen

Chief Market Strategist


AMC Chief Braces for Questions on Dividend and Debt

AMC Entertainment CEO Adam Aron has given his shareholders more skin in the game. Aron has paved the way for retail investors to ask questions during the Q2 2021 earnings webcast, which will be a first for the company. The popular CEO has already begun to vet some of the questions, saying that they are “really smart” and calling the ideas that have been presented fascinating.

Individual Investors Want to Know

Nearly 4,200 questions have poured into the Say app from retail investors so far. Among the most popular questions is whether AMC will resume rewarding shareholders with a dividend, which it stopped doing at the start of the pandemic year. The question has received more than 32K upvotes and the most “shares” of any question. In February 2020, AMC announced a dividend of USD 0.03 per share and hasn’t paid a dividend since then. That compared to a distribution of USD 0.20 per share in early 2019.

Source: AMC

Another popular question is whether a potential AMC/GameStop partnership could be in the works. This shareholder is looking for “theatre experiences via local and national gaming competitions.”

AMC and GameStop are two of the early meme stocks and have gained popularity among retail investors this year. Investors in both stocks have taken it on the chin in recent months as shares have been under pressure. AMC is down a steep 10% today ahead of the company’s earnings call on Aug. 9.

Something else that is on the minds of AMC investors is COVID, especially given the emergence of the delta variant. One investor suggests that the company consider going back in time to offering drive-in movie theaters, and at the very least they want to know how AMC would respond to another lockdown.

Debt Load

AMC is saddled with a heavy debt load on its balance sheet. Investors want to know how the movie chain will slash its debt without selling new shares. The company recently attempted to raise capital by issuing 25 million new shares but reversed course on the heels of investor backlash.

As of the end of Q1, AMC’s long-term debt stood at USD 5.5 billion. The company has said it plans to pare down its debt with the cash that it has raised. But it won’t be by selling new shares, at least not before 2022.

Another company that is welcoming questions from shareholders is cryptocurrency exchange Coinbase, whose earnings call is planned for Aug. 10.

Natural Gas Price Prediction – Prices Break Out on Warm Weather Forecast


Natural gas prices broke out on Wednesday ahead of Thursday’s inventory report from the Department of Energy. Expectations are for a35 Bcf build in stockpiles, according to survey provider Estimize. Last week the EIA inventory report came in at the same level. The weather is expected to remain much warmer than normal in the North East, followed by above-normal temperatures for the next 8-14 days. There are currently 2-storms in the Atlantic that have a zero-percent chance of becoming a tropical cyclone over the next 48-hours.

Technical Analysis

Natural gas prices broke out and strong momentum and should continue to test higher prices. The weekly chart of natural gas shows that it has target resistance near $4.92, which is another 17% higher. Support is seen near the 10-week moving average at 3.63. Weekly momentum is positive as the fast stochastic generated a crossover buy signal. Medium-term momentum is also positive as the weekly MACD (moving average convergence divergence) histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

Demand Remains Strong

The electric power sector drove U.S. consumption of natural gas increases. According to the EI total U.S. consumption of natural gas rose by 3.6% compared with the previous report week’s increase of 1.5%. Natural gas consumed for power generation climbed by 5.8% week over week, or 2.2 Bcf per day, nearly matched by a 5.7% increase, or 0.4 Bcf per day, in consumption in the residential and commercial sectors.

Gold Price Prediction – Gold Prices Whipsaw Following ADP and ISM

Gold prices attempted to move higher on Wednesday but were rejected at higher levels. The initial surge came following the softer than expected U.S. ADP private payrolls report that showed fewer jobs created during July. The number was countered by the stronger than expected ISM services report which buoyed yields. The greenback moved higher as yields rose, which seemed counterintuitive. This comes ahead of Friday’s government employment report, which is scheduled to be released by the Department of Labor.

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Technical analysis

Gold prices moved sideways but attempted to move higher early on Wednesday but were rejected strongly. Prices came off after the initial reaction to the weaker than expected U.S. labor report. Support is seen near the 10-day moving average at 1,809. Resistance is seen near the July highs at 1,834. Momentum is neutral as the fast stochastic continues to flip-flop and generate buy and sell signals.  Medium-term positive momentum is decelerating as the MACD (moving average convergence divergence) histogram is printing in positive territory with a downward sloping trajectory which points to consolidation.

Jobs Data Disappoints

According to ADP, Private payrolls (non-government jobs) tumbled in July as fears mounted over the spreading Covid-19 delta variant. Employers added 330,000 positions for the month, a sharp deceleration of 680,000 in June. The number was well below the 653,000 estimates. June’s final total fell from the initial estimate of 692,000.

Shares Of General Motors Down By 8% After Missing Earnings Expectations

The shares of General Motors are down by over 8% today after the company missed earnings expectations in the second quarter of 2021.

General Motors Miss Earnings Expectations

Car manufacturer General Motors reported its second-quarter earnings earlier today, and it didn’t perform as analysts had expected. The shares of the company dipped following this announcement despite General Motors raising guidance for the year.

The adjusted earnings per share is $1.97 vs. $2.23 expected. However, General Motor’s revenue surpassed analysts’ expectations. The company generated $34.17 billion in the second quarter of the year compared to the $30.9 billion estimated by analysts.

The second-quarter earnings were negatively affected by the $1.3 billion warranty recall costs, including the $800 million General Motors spent on o the Chevrolet Bolt EV. The electric car has so far been recalled twice over the past year due to fire risks, with the most recent happening last month.

General Motors also raised its adjusted full-year guidance. It currently stands between $11.5 billion and $13.5 billion, or $5.40 to $6.40 per share. The adjusted full-year guidance is up from the previous $10 billion to $11 billion, or $4.50 to $5.25 a share.

GM’s Shares Down By 8%

The Shares of General Motors are down by over 8% since the company reported its Q2 earnings. At the time of this writing, GM is trading at $53.01 per share. Year-to-date, GM’s shares are up by over 20%. It started in 2021 trading at $41 per share, but it is now trading at $53.

GM stock chart. Source: FXEMPIRE

The automaker expects to manufacture roughly 100,000 fewer vehicles in North America in the second half of 2021 compared to H1. General Motor’s financials have improved in recent months. The unadjusted net income was $2.8 billion for Q2 compared with a loss of $758 million in the same period last year. Furthermore, General Motors reported adjusted pretax earnings of $4.1 billion for Q2, up from a loss of $536 million a year earlier.

S&P 500 Price Forecast – Stock Markets Continue to Wait on Jobs Number

The S&P 500 has pulled back just a bit during the course of the trading session on Wednesday as we continue to see a lot of noise. At this point, the market is simply waiting on the jobs number on Friday, as the ADP number disappointed. Nonetheless, this is a market that continues to find reasons to go higher, and therefore you cannot short it. The uptrend line comes into play as support, just as the 50 day EMA will. If we break down below the short term consolidation area, then it is possible that we could find a bit of supportive action.

S&P 500 Video 05.08.21

On the other hand, if we break above the highs of the last week, then it is likely that we will continue to reach towards the 4500 level. I suspect that by the time the end of the week comes, we will have some type of buying pressure. On the other hand, if we were to turn around a break down below the 50 day EMA then it is possible that the market goes looking towards the 4200 level, possibly even the 4000 level which is a large, round, psychologically significant figure and what I considered to be the “floor the market” as well.

There are a lot of options barriers and that general vicinity, so I think all things being equal that will be difficult to break down through. In general, I believe that we will continue to have buyers jump into this market and push the market much higher. After all, we have the “Powell put”, which keeps the market afloat.

For a look at all of today’s economic events, check out our economic calendar.

Bitcoin Price, Forces Which Influence It

The nature of Bitcoin still remains unknown for many, it still holds secrets to some, and the others think that Bitcoin and the cryptocurrency is the greatest scam. But yet, news about Bitcoin is everywhere and Bitcoin’s daily trading volume has reached over $178 bln last year.

Being developed as the first low-cost cross-border payment means, which was supposed to be an alternative to a fiat currency, until today was entitled many times as a digital gold, an asset, a Ponzi scheme etc. Bitcoin drives it’s value from the funds which were invested into it, what keeps the price of Bitcoin, in other words, it’s value, is the costs associated with it. The proof-of-work consensus which is applied to Bitcoin and its popularity mainly drives its price.

But what causes the drop?

When Bitcoin is such a great tool for cross-border payments, what makes people or institutes sell it and drop its price?

Well the first answer to this question is that no asset price can grow forever, eventually those who purchased at a lower price will sell their Bitcoins to accumulate profits.

It’s August and Bitcoin hasn’t shown the anticipated jump to $50K USDT and the promising rise of July 21 was rejected by a resistance at nearly $43K USDT. I use USDT to display the market data as in derivatives, USDT is mainly used, datafeed used is from a Licensed derivatives exchange – Bitget.

BTC/USDT quote from Bitget, chart from TradingView

According to the technical analysis this rejection was caused by dynamic and static resistances, whereas RSI indicator reached it’s “oversold” level. As for fundamentals the rise and falls of Bitcoin were caused by various events which any Bitcoin trader should not neglect.

Let’s see some examples: A breakdown of Key events which influenced the BTC price.

BTC/USDT quote from Bitget, chart from TradingView

1 – There was a mixed sentiment on the market during the release of the US Core CPI, PPI and Retail Sales data. Mainly these data were referring to the strength of the US dollar which was caused by the lower than expected CPI and Retail sales, which lowered the US high inflation fear. The US Dollar Index after the release of the data was up 0.01% and 0.98% the next day.

2 – June 24 and 25. Core durable goods orders, rise of GDP and a higher than expected Jobless claims. The rise of the US GDP gave another purchasing power to the US Dollar, while the higher jobless claims signalled the withholding of the purchasing power among the consumers, US consumers keep limit from spending and rather keep the USD, which also signals the containment of the inflation hike. The US Dollar index was up 0.09% and 0.03% respectively.

3 – An important release was made, which is the CB Consumer confidence which shows consumers trust in current economic activities. The positive confidence supported another consecutive gain of the US Dollar which was up 0.29% that day.

4 -5 – July 4, Independence Day, probably the confident speech of President Biden related to the US economy and it’s recovery led to this rebound. The oil to the fire was poured when Chinese central bank and Chinese authorities were reportedly taking actions against all operations related to cryptocurrencies.

6 – July 6-7-8, three consecutive days of important economic data from the US. ISM Non-manufacturing PMI, JOLTS Job openings, FOMC Meetings minutes and Initial Jobless claims. Both Job openings and Jobless claims were negative for the employment statistics but had a positive impact on DXY among investors. The FED policymakers stated that the economic growth and it’s future forecasts back up the decrease of the asset purchases, the FED also stated that it should lower to zero the money injection into the US economy.

7 – July 20 to July 31. The economic data from the US began shimmering negative outcomes to what the FED was calling as the economic growth as the Jobless claims rose significantly. Adding oil to the fire were lawful claims against one of the crypto exchanges Binance which is constantly being watched by countries watchdogs for its illegal operations.

These were the crackdown of the events which affected the Bitcoin’s price, but what does a technical analyst see when analyzing the chart?

BTC/USDT quote from Bitget, chart from TradingView

First, what a technical analyst sees is a strong resistance at point 1, which is shown on the chart above, the second is the RSI indicator’s overbought signal. What that means is that Bitcoin purchases has reached their peak and buyers will look to selling it to get profits, and since the Bitcoin derivatives is widely spread across major US banks and on other exchanges globally, large cap investors will look into opening shorts on BTC (in derivatives a trader can make profit from buying and selling).

Once the price hits the support zone and RSI reaches its oversold area, Bitcoin experiences accumulation, this is where investors and traders will look into filling their portfolio with Bitcoin to gain profits later when the price increases. However the overall market sentiment, China bans, Binance bans and the growing strength of the US economy doesn’t allow the price to retest the resistance and grow further. Hence, Bitcoin tests previous local strong resistances, tests support zones as resistance and goes down again.

Since derivatives were introduced by crypto exchanges and CME and the Bitcoin futures trading was widely spread across the US and global banks, Bitcoin now is more volatile and is more sensitive to the global economic data. Large cap investors which inject their funds into Bitcoin futures trading are always keeping track of the US economic data and the volumes generated from derivatives trading surged heavily and will in the nearest future outperform the spot trading.

Data from CME Group

Although it might seem that the trading volume on CME is low, on the global markets, daily Bitcoin derivatives trading volume is more than $55 bln.

What is next for Bitcoin’s price?

As the chart below suggests, Bitcoin still hasn’t reached the accumulation zone, and the RSI’s buy signalling oversold levels.

BTC/USDT quote from Bitget, chart from TradingView

However there is a large open interest at $37K and the impulse of July 21 looks very strong, hence Bitcoin might not go below $35K. Rather, it might test the 50-day Exponential moving average at levels $37000 – $37500 and continue the uptrend with a higher pace. The higher pace and large purchasing power is required to break the monthly dynamic resistance of April 2021, otherwise Bitcoin will struggle near the $40800 and if no impulse is shown there, it might resume the correction.

We might also refer to the similarity of price actions to calculate our estimate and make forecasts. There is a similar price action spotted on Bitcoin’s price chart and as seen on the chart, the uptrend resumed even though the RSI was in a mid range.

BTC/USDT quote from Bitget, chart from TradingView

What could cause Bitcoin’s surge?

It pains to say but the spread of the Delta variant could support Bitcoin’s surge as it was during all lockdowns. Lockdowns per se hold consumers’ expenditures and increase a risk appetite among investors and traders, if lockdowns continue this will signal the delay of the economic growth forecasted by the FED and will decrease the Consumer confidence, which will be a major hit to the US Dollar index. Another fact that Bitcoin’s price may surge is the regulation and the ban of problematic exchanges which are constantly under investigation and of course the migration of miners from China to other countries, mainly the US, where in some states operations with cryptocurrency and its mining is regulated.

When the breakout from the dynamic resistance is confirmed, i.e. Bitcoin closes above $40800 or at any level above the dynamic resistance, the surge will most likely continue up to $47300 and $50800, where it might drop to the previous resistance to retest it as support and continue the uptrend.

BTC/USDT quote from Bitget, chart from TradingView

My anticipation of the price to hit $72K by October remains but we should analyse the future price action of BTC starting from now. There will be a huge update to Bitcoin’s mainnet which should reduce the transaction cost and time and also implement NFT features to Bitcoin. With the growing demand of NFT’s and it’s large cap total volume capped, Bitcoin might dominate the NFT market as well and increase its overall market dominance.

For the time being, I highly recommend you to follow the US Economic data, follow the market sentiment and trade wisely. When trading refers to what large cap investors analyse and follow as they are in control of the market right now. Today we are expecting important data from the US – ISM non-manufacturing PMI and employment and the US Dollar index already reacted to the positive expectations and started to rise, so watch the release closely.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Dollar Index (DX) Futures Technical Analysis – Counter-Trend Shift in Mometum Targets 92.490 – 92.495

The U.S. Dollar is trading lower at the mid-session on Wednesday after whip-saw price action earlier in the session was fueled by similar volatility in U.S. Treasury yields. As we head into the second half of the session, the greenback is rebounding from the early break that was triggered by the release of an unexpectedly weak private employment report.

At 16:47 GMT, September U.S. Dollar Index futures are trading 92.270, up 0.182 or +0.20%. This is up from a low of 91.820.

The initial downdraft came when the ADP National Employment Report showed U.S. private payrolls increased about half as much as economists had expected, likely constrained by shortages of workers and raw materials.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum shifted to the upside earlier today when buyers took out 92.215. This move confirmed last Friday’s closing price reversal bottom. A trade through 91.780 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The nearest support is a pair of retracement levels at 91.950 and 91.850.

On the upside, the nearest target is a resistance cluster at 92.490 to 92.495.

Daily Swing Chart Technical Forecast

The strong upside momentum and the low volume could trigger a further rally into 92.490 to 92.495. Since the main trend is down, look for sellers on the first test of this area.

E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Showing Some Strength Over 14954.00 Pivot

September E-mini NASDAQ-100 Index futures are inching higher at the mid-session on Wednesday. Although the index is trading at its highest level since July 29, it still remains inside the wide range formed on July 27. This type of price action tends to indicate investor indecision and impending volatility.

At 16:14 GMT, September E-mini NASDAQ-100 Index futures are trading 15061.75, up 15.50 or +0.10%.

In stock related news, the three biggest gainers are Moderna Inc, Advanced Micro Devices Inc and Zoom Video Communications Inc. They are up 7.39%, 5.35% and 3.55% respectively. The three biggest losers are Amgen Inc, Match Group Inc and Kraft Heinz Co. They are currently trading down 5.89%, 5.79% and 4.78% respectively.

In economic news, the ADP private payroll survey showed a gain of 330,000 jobs in July, well short of the consensus estimate of 653,000. The report comes ahead of the Labor Department’s official jobs report, which will be released on Friday, CNBC said.

Daily September E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 15134.00 will signal a resumption of the main trend. A move through 14445.00 will change the main trend to down.

The minor range is 15134.00 to 14774.25. The index is currently trading on the strong side of its pivot at 14954.00.

The short-term range is 14445.00 to 15134.00. Its 50% level at 14789.50 is another potential support level.

Daily Swing Chart Technical Forecast

The direction of the September E-mini NASDAQ-100 Index into the close is likely to be determined by trader reaction to 14954.00.

Bullish Reaction

A sustained move over 14954.25 will indicate the presence of buyers. If there was volume today then we could see a surge into the record high at 15134.00.

Bearish Reaction

A sustained move under 14954.00 will signal the presence of sellers. If this move can generate enough downside momentum then look for the selling to possibly extend into the support cluster at 14789.50 to 14774.25.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Forecast – Silver Markets Pull Back from 50 Day EMA

Silver markets got hammered after initially looking strong during the trading session on Wednesday. The 50 day EMA offered resistance, and as the US dollar strengthen, that broke down the silver market. Furthermore, we have seen a lot of noisy behavior in the commodity markets overall, as the greenback has its influence on them. The 200 day EMA has offered a bit of an anchor for price yet again, as we are looking to settle in that general vicinity.

SILVER Video 05.08.21

Looking at this chart, you can see that there is a lot of support underneath, especially in the form of the uptrend line of the ascending triangle, and if that were going to be tested, a break down below that level could open up a major move lower, perhaps opening up the possibility of a move towards the $20 level. That obviously would be a huge move, and therefore I think it would be a nice continuation of the massive pullback we have seen. On the other hand, if we were to break above the top of a shooting star, which opens up the possibility of testing the $27 level, which is an area of significant resistance.

If we break above there, then the market is likely to go looking towards the $28 level. That is an area that has also been important, and I think more than anything else you can take away from this analysis is that we continue to go back and forth and struggle for some type of clarity overall. With that being the case, we will be very choppy between now and the jobs figure.

For a look at all of today’s economic events, check out our economic calendar.

Crude Oil Price Forecast – Crude Oil Continues to Drift Lower on Reopening Trade Fears

WTI Crude Oil

The West Texas Intermediate Crude Oil market has fallen a bit during the course of the trading session on Wednesday, as we have broken well below the $70 level. Mixed economic numbers coming out the United States of course is not helping the situation, so I think it is only a matter of time before we have to make a bigger decision. Inventory numbers have been less than impressive, and that of course is weighed upon the market as well. However, the market is starting to turn around again, so the question at this point in time is whether or not we are going to bounce going forward? The hammer that formed during the previous session and the one that we are trying to form on Wednesday suggests that buyers are starting to come back in.

Crude Oil Video 05.08.21


Brent markets also have fallen a bit during the course of the trading session but have clearly found quite a bit of support underneath at the $70 level, and then turned around to form a bit of a hammer. At this point in time, it looks as if the market is trying to find its way back to the upside, as the demand for crude oil should in theory continue to pick up. Having said that, the market also has to worry about the inventory numbers in the United States that disappointed drastically. That being said, it is likely that we are going to continue to see a lot of back and forth, but it certainly looks as if we are showing signs of support at this point.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Forecast – Natural Gas Exploded to the Upside

Natural gas markets have gapped higher to kick off the trading session on Wednesday, and then shot straight up in the air. By doing so, we have cleared the most recent highs and now look likely to go towards the $4.40 level, an area that I had been talking about previously. When you look at the chart you can make an argument for a bullish flag, not only here but below on the way up to this level. Beyond that, we also have the previous consolidation area that measured for a move to the $4.40 level, and therefore I think it all kind of lines up quite nicely.

NATGAS Video 05.08.21

On the occasional pullback, there will more than likely continue to be plenty of buyers, as the heat wave in the western part of the United States continues to drive up pricing, and of course we have the overall commodity boom that helps the situation as well. To the downside, the area around the $4.00 level should be thought of as a bit of a “floor the market” right now, so pay close attention to any reaction and that vicinity if we do pull back. On the other hand, if we break above the top of the candlestick for the day, then it just simply is going to allow the market to go much higher. All things been equal, I have noticed in shorting this market anytime soon, unless of course there is some type of drastic change in the weather, something that I see that happening right away. Eventually, we may get a massive selloff but right now we are nowhere near it.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Forecast – Gold Markets Get Hammered After Initial Rally

Gold markets have rallied to kick off the trading session on Wednesday to reach the top of the consolidation area that we have been in for a while. The $1830 level has been very resistive, and this has come to pass yet again as we got hammered due to mixed economic data coming out the United States. The resulting candlestick is very ugly, and at this point in time we are simply hovering around the 50 day EMA as well as the 200 day EMA.

Gold Price Predictions Video 05.08.21

On the other hand, if the market was to break above the top of the shooting star for the trading session, then it is likely that the market could go looking towards the $1860 level, which is where the gap ends. A lot of this will come down to the US dollar, as it does have a strong negative correlation to this market, and as a result I pay close attention to the US Dollar Index.

To the downside, the $1790 level would be support based upon what we have seen recently and could make a target if we break down a bit. If we were to break down below there, then the market is likely to go down towards the $1750 level. That is an area that of course has been support and therefore would make a target. If we break down below there, then the market is likely to go down to the $1680 level where the massive double bottom is sitting. In general, think we get a little bit of choppy behavior between now and Friday.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – U.S. Dollar Moves Higher As Treasury Yields Rebound

Canadian Dollar Remains Under Pressure Amid Weakness In Commodity Markets

USD/CAD continues its attempts to settle above the resistance at 1.2550 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index has recently gained strong upside momentum and is currently trying to settle above the resistance at the 20 EMA at 92.30. In case this attempt is successful, the U.S. Dollar Index will move towards 92.50 which will be bullish for USD/CAD.

Today, U.S. released ADP Employment Change report which indicated that private businesses created just 330,000 jobs in July compared to analyst consensus of 695,000. U.S. Services PMI report was a bit better than expected as Services PMI declined from 64.6 in June to 59.9 in July compared to analyst consensus of 59.8.

Foreign exchange market traders also focused on the recent volatility in U.S. government bond markets. The yield of 10-year Treasuries made an attempt to settle below 1.13% but lost momentum and rebounded towards 1.20% which was bullish for the American currency.

Meanwhile, WTI oil continued to move lower on virus worries, which was bearish for commodity-related currencies, including Canadian dollar.

Technical Analysis

usd cad august 4 2021

The technical picture for USD to CAD has not changed much compared to the previous trading session. USD to CAD is trying to settle above the nearest resistance level at 1.2550. If USD to CAD manages to settle above this level, it will move towards the resistance at 1.2590.

A move above 1.2590 will push USD to CAD towards the resistance at 1.2625. In case USD to CAD gets above 1.2625, it will head towards the resistance at 1.2650.

On the support side, the nearest support level for USD to CAD is located at the 20 EMA at 1.2520. A move below the support at 1.2520 will open the way to the test of the support at 1.2500. In case USD to CAD manages to settle below 1.2500, it will head towards the next support level which is located at 1.2480.

For a look at all of today’s economic events, check out our economic calendar.

Why General Motors Stock Is Down By 8% Today

General Motors’ Stock Declines As Earnings Guidance Misses Analyst Estimates

Shares of General Motors gained strong downside momentum after the company released its second-quarter results. General Motors reported revenue of $34.2 billion and GAAP earnings of $1.90 per share, easily beating analyst estimates on both earnings and revenue.

For the full-year 2021, the company expects to report earnings GAAP earnings of $5.12 – $6.12 per share. On an adjusted basis, General Motors projects to report a profit of $5.40 – $6.40 per share, and the company’s expectations are lower than analyst estimates.

General Motors stated that it should have a strong second half of the year despite risks posed by the coronavirus pandemic and global chip shortage. However, the market focused on the company’s earnings guidance, and the stock found itself under strong pressure.

What’s Next For General Motors Stock?

The company raised its guidance for the full-year 2021, but its new forecast is below analyst estimates. It looks that analysts were too optimistic while General Motors failed to live up to their high expectations. This is bad for the stock, and it is not surprising to see that shares of General Motors are dropping like a rock today.

I’d also note that worries about potential disruptions brought by the coronavirus pandemic may also have a negative impact on General Motors stock. While the company stated that is was confident about its performance in the second half of the year, the rapid spread of the Delta variant of coronavirus may ultimately put more pressure on chip manufacturers and hurt automakers.

Analyst estimates for General Motors’ earnings will be lowered which is often bearish for a stock despite the fact that investors have already seen the company’s own estimates. However, a strong correction may ultimately attract value-oriented investors who search for good deals in a very expensive market.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD: Loonie Remains Range-Bound, Could Turn Volatile

The Canadian dollar traded marginally lower but remained range-bound in lackluster trade against the U.S. dollar on Wednesday amid volatility seen in crude prices.

Today, the dollar to loonie conversion rose to 1.2562, up from Tuesday’s close of 1.2536. The Canadian dollar had lost about 1% in July – the second biggest monthly drop since September 2020 and has weakened about 0.6% so far this month.

Canada is the world’s fourth-largest exporter of oil, which edged lower on rising concern that the new delta variant will derail the global economic recovery.  U.S. West Texas Intermediate (WTI) crude futures were trading 2.14% lower at $69.06 a barrel.

High oil prices lead to higher U.S. dollar earnings for Canadian exporters, resulting in an increased value of the loonie.

USDCAD’s late July move lower has stalled and may be reversing. The USD decline found support in the low 1.24 zone, near retracement and (40-day MA) support. At the very least, the move lower from the mid-July peak around 1.28 has stalled and needs to consolidate. The move higher from Friday’s low is impulsive and is developing strong, if only short-term at the moment, upward momentum,” noted Shaun Osborne, Chief FX Strategist at Scotiabank.

“The USD’s breach of the 1.2525/30 zone, which was the base of the late July sideways range for the USD, implies scope for additional gains towards 1.2605 which was the top of that range. Trend strength signals are either bullish or tilting towards bullish from the USD’s perspective, suggesting that the USD move up may well develop further in the next few days/weeks. Key USD support now is 1.2425. We are constructive on the USD and look to fade minor dips.”

The most important data point will come on Friday, when the Canadian government reports about the July employment data numbers for July.

The dollar index, a measurement of the dollar’s value relative to six foreign currencies, was trading 0.17% higher at 92.239 at the time of writing. Still, not far from this month’s low of 91.782.

The dollar stalled its rally after the Fed highlighted that the interest rate hike is far away in its last week’s monetary policy decision. The U.S. central bank also did not give any hint about reducing its purchases of government bonds.

However, the risk that the world’s dominant reserve currency, the USD, recovery over the coming year is high, largely driven by the Fed’s expectation of two rate hikes in 2023.

A strengthening dollar and growing risk that the Federal Reserve would tighten its monetary policy earlier than expected would push the USD to CAD pair higher.

Grayscale Deepens Its Bitcoin ETF Bench as Regulatory Waters Stir

Now that the bitcoin price is hovering below the USD 40K level once again, the market could use a catalyst to release the bulls. One driver that might do the trick would be a bitcoin ETF, as it would make it easier for investors to gain access to the crypto markets. This would pave the way for registered investment advisors (RIAs), who manage trillions in client assets, to steer mainstream America toward cryptocurrency funds.

Once a bitcoin ETF is an option in a 401(k) retirement plan, for example, demand is likely to surge. While regulators have been moving at a snail’s pace, the cryptocurrency industry continues to take steps to prepare for such an event.

Key Hire

Grayscale Investments already oversees one of the most popular cryptocurrency investment products for institutions, the Grayscale Bitcoin Trust. Now the firm has made a splash with a new hire — seasoned ETF executive David LaValle.

The Wall Street alum was brought on to lead Grayscale’s “ETF conversion efforts,” according to CEO Michael Sonnenshein. LaValle’s official title is senior managing director and global head of ETFs, and he will report to Sonnenshein.

LaValle is a seasoned ETF executive and previously served as chief executive of Alerian, which is behind energy infrastructure indices. His presence at Grayscale further underscores the firm’s dogged determination to convert its bitcoin trust, among other funds, into ETFs, as Sonnenshein affirmed in the announcement. In addition to the Grayscale Bitcoin Trust, the firm oversees investment trusts for cryptocurrencies such as Ethereum, Basic Attention Token, Chainlink and more.

Regulatory Radar

The timing of the new hire coincides with a heightened regulatory focus on bitcoin and the cryptocurrency industry. U.S. SEC Chair Gary Gensler still believes that crypto is the “Wild West,” according to a recent speech, but he has also tipped his hand to a market in which a bitcoin ETF exists. He foresees a world in which companies apply for a bitcoin ETF “under the Investment Company Act,” which is the umbrella under which mutual funds are regulated.

A CME-fueled bitcoin futures ETF could also be in the offing, but as a Bloomberg analyst points out, that is not the same as holding the BTC directly, which is part of the charm of owning bitcoin in the first place. Gensler is after investor protection. MicroStrategy CEO Michael Saylor believes that “regulatory clarity will benefit bitcoin.”

Gold: What’s Going To Happen After the Dust Settles?

This week’s back-and-forth movement in gold, silver, and mining stocks is neither particularly exciting nor interesting. There is, however, some fundamental news that I would like to cover today.

Nonetheless, let’s start with the charts. The single notable technical thing is today’s pre-market performance of gold vs. the performance of silver.

Here’s what gold did so far today:

It moved slightly higher in a relatively boring manner; it moved a bit higher after having moved a bit lower. Nothing to write home about.

And here’s what silver did so far today:

Silver moved higher as well, and while this move was relatively insignificant in nominal and percentage terms (+0.78%), it was much bigger than what we saw in gold (+0.22%); the difference is crystal-clear when we compare today’s pre-market moves to the most recent short-term highs in both precious metals.

Silver moved to its recent short-term high while gold is not even close to being halfway back up. This means that on a very short-term basis, silver is clearly outperforming gold.

This is also what tends to happen shortly before significant declines across the precious metals sector.

Now, the sizes of both moves were not that significant, so this performance could also be more or less random, and, if that was the case, the outperformance would be just accidental. Consequently, it’s not a game-changing signal in terms of its importance. It is something that’s on top of multiple other indications that we have, and the most important ones are not of a short-term nature at all. The long-term self-similarities in gold and the HUI Index (gold stocks) are the true key to understanding where the precious metals sector is likely to head next, and you already know about those, as I described them thoroughly on Monday.

Should We Fear Countertrends?

Having said that, let’s move to the less technical details and more fundamental ones. Before I proceed, though, I would like to reply to a question that I just received that will serve as a good segue from the world of the technicals into the world of the fundamentals. Here’s the question (the bold formatting was added by me):

You have made a compelling case and a very thorough one for the decline in the precious metals market, and yet the US treasury Bond yields decline and the USD-DXY continue to decline. The analysis needs to include the countertrend that exists and how this countertrend occurred. You refer to this in one-sentence statements which are not very clear.

There have been many short-term moves in Gold that have been fairly substantial, and the current trend in the USD and US 10yrT yield is significant. Explaining how the countertrends could and would move within your analysis and projections would help everyone… The daily analyses are much appreciated and I would like to have better understanding of the countertrend moves within your analyses, as well as the US Fed and the ECB influence.

And here’s my reply.

As far as the USD Index (USD-DXY) is concerned, then I wouldn’t say that it “continues to decline”, as it’s been on the rise since the beginning of this year. But let’s say that we’re talking about the last 2 weeks or so. In this case, the USD Index is indeed declining. The highest recent closing price was 92.98 (July 20). Yesterday’s closing price for the USD Index was 92.09, so the USDX is down by 0.89 – almost a full index point.

What did the 10-year yield do between those dates? The $TNX (10-year US Treasury Index) declined from 12.09 to 11.76. But if we took July 13 as the starting date (the recent short-term high in the $TNX), we would see that it moved from 14.15 to 11.76 – a substantial decline.

Ok, what did gold do during these times? Almost nothing. Gold moved from $1,811.40 (July 20) to $1,814.10 (August 3). So, while the USD Index declined by almost a full index point, gold moved higher by a mere $2.70.

And in the case of the TNX, between July 13 and yesterday, gold moved from $1,809.90 to $1,814.10 (it moved higher by a mere $4.20).

Based on this comparison, the reply is already quite evident. What if these trends continue? If these trends continue, gold is likely to do… Nothing.

Based on how gold tends to perform (based on the 2008 and 2011-2013 analogies), it’s time for gold to fall, and to fall hard. If it was just gold that was performing just as it did in all those years, it might not have been as critical. But gold stocks (the HUI Index) are doing the same thing! They are also repeating what happened in all those years. And based on these analogies, the markets are about to slide.

Now, what does the market do if it wants to move in a given direction (here: down) and it gets bullish signals from other markets or the from news? It ignores them. This could take the form of reacting in a weak manner and then, after the dust settles, moving slowly back down. That’s exactly what gold has been doing.

The bullish indications from the USD Index (reminder: they are of a very short-term nature only; the USDX tends to rally after bottoming in the middle of the year) and bond yields are simply delaying the PMs’ slide. At the same time, gold, silver, and mining stocks act like a spring that’s being coiled with bigger force. It doesn’t move, but when something finally changes (yields and the USDX move higher), something big (here: decline in the PMs) is likely to happen.

Having said that, let’s move to the more fundamental part of the analysis. I will also discuss the situation in bond yields more thoroughly in the upcoming analyses.

Work in Progress

With the USD Index patiently waiting for the release of the U.S. nonfarm payrolls report on Aug. 6, the greenback has recorded a muted start to the month. However, if payrolls outperform and investors accelerate the U.S. Federal Reserve’s (FED) taper timeline, a U.S. dollar surge could happen sooner rather than later.

In the interim, though, the U.S. labor market is trending in the right direction. Case in point: while Gusto – a software company that provides cloud-based payroll, benefits and human resource management solutions for U.S. businesses – largely downplayed the end of enhanced unemployment benefits in many states, an excerpt from the Jul. 27 report read:

“Looking at employment trends by employee age, we observe that around the time of governors’ announcements in the first week of May, hiring rates for workers 25 and older rose in states ending these benefits early, which indicates that UI did play a role in the labor supply decisions of a group of adult workers.”

Please see below:

To explain, the black line above tracks the cumulative headcount of adults 25 and older in the states where enhanced unemployment benefits ended early, while the brown line above tracks the same cohort in states where enhanced unemployment benefits are still in play. If you analyze the acceleration of the black line, it’s clear that fiscal benefits have impacted U.S. citizens’ desire to find employment.

Also noteworthy, Indeed revealed on Aug. 3 that U.S. job openings fell by “two points from last week” and that “job postings increased in May, June, and July at a slower pace than in March and April.”

Please see below:

At first glance, the results may seem disappointing. However, it’s important to remember that if job postings are declining, businesses have likely filled the vacancies. Think about it: when a person is hired, the job posting is no longer necessary. And with the latter declining at a time when enhanced unemployment benefits have ended for roughly 30% of Americans, the ‘coincidence’ signals that a restocking of the U.S. labor force is already underway.

Allocation to the Dollar Rises

Circling back to the USD Index, as indicated in the CoT reports, the non-commercial (speculative) futures traders, asset managers and leveraged funds’ allocation to the U.S. dollar are now at 2021 highs.

Please see below:

To explain, the dark blue, gray and light blue lines above represent net-long positions of non-commercial (speculative) futures traders, asset managers and leveraged funds. When the lines are falling, it means that the trio have reduced their net-long positions and are expecting a weaker U.S. dollar. Conversely, when the lines are rising, it means that the trio have increased their net-long positions and are expecting a stronger U.S. dollar. And if you analyze the right side of the chart, you can see that the trio have upped their bullish bets in recent weeks (with leveraged funds moving notably higher last week).

On the flip side, euro sentiment is moving in the opposite direction. And because the EUR/USD accounts for nearly 58% of the movement of the USD Index, the performance of the currency pair is extremely important.

Please see below:

To explain, the dark blue, gray and light blue lines above track the trio’s allocation to the euro. If you analyze the right side of the chart, you can see that speculative euro bulls are throwing in the towel.

Furthermore, the relative fundamentals also favor the greenback. With U.S. GDP growth poised to outperform the Eurozone, growth differentials still signal a stronger U.S. dollar. For example, Stellantis NV – a European automaker that was created following the merger of PSA Group and Fiat Chrysler in 2021 – increased its full-year 2021 earnings guidance on Aug. 3. The main reason? Higher output in North America.

Please see below:

Source: Stellantis NV

Households in the US Are… Wealthier?

On top of that, with U.S. fiscal benefits plumping consumers’ balance sheets, household savings in the U.S. far outweighs the Eurozone. For context, the construction of the European Union makes it difficult for the bloc to find common ground on fiscal policy. And while the lack of spending decreases the supply of euros relative to U.S. dollars, the growth outperformance should result in capital flowing into the U.S. and investors buying the U.S. dollar.

Please see below:

To explain, the stacked bars above depict various regions’ household savings over the last six quarters. If you analyze the column on the right side of the chart labeled “Q2,” you can see that the U.S. (the dark blue section) has much more household savings built up than the Eurozone (the light blue section). As a result, when U.S. citizens’ willingness to spend matches their ability to spend, the prospective economic outperformance is bullish for the greenback.

To that point, while the U.S. is about to recoup its pre-pandemic GDP growth trajectory, the Eurozone isn’t expected to reach the milestone until late 2022.

Please see below:

To explain, the chart on the left compares the Eurozone’s current growth trajectory (the blue line) with its pre-pandemic trend (the pink line). If you analyze the gap, you can see that the Eurozone is still a ways away from recapturing its past glory. Conversely, if you turn your attention to the chart on the right, you can see that the U.S. has already recouped its pre-pandemic GDP level (100) and the region is expected to exceed its pre-pandemic trend in the third or fourth quarter of 2021.

Finally, with the momentum shifting across emerging markets, foreign portfolio flows have stalled once again.

Please see below:

To explain, the stacked bars above categorize non-resident portfolio flows into emerging markets, while the black line above tracks the consolidated total. If you analyze the sharp fall in early 2020 and the sharp rise in late 2020, the former coincided with a sharp rise in the USD Index, while the latter coincided with a sharp fall in the USD Index. More importantly, though, if you focus your attention on the right side of the chart, you can see that non-resident portfolio flows into emerging markets continue to lose momentum. And if the dynamic persists, it will likely add even more fuel to the USD Index’s fire.

In conclusion, the precious metals’ performance was mixed on Aug. 3, as payrolls uncertainty has many assets stuck in consolidation mode. However, whether reality resurfaces on Aug. 6 or the PMs bask in what’s left of the summer sun, the bearish medium-term implications remain intact. With the U.S. labor market moving closer to the FED’s taper threshold, the PMs have become increasingly anxious. And after the U.S. 10-Year real yield hit another all-time low on Aug. 2, the metals’ inability to muster a relief rally is a sign of extreme weakness. The bottom line? While short-term bursts of strength are definitely possible and expected along the way, the PMs’ medium-term trend still remains down. And it seems that the current short-term corrective upswing in gold, silver, and mining stocks is over or about to be over.

Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

USD/JPY Price Forecast – US Dollar Gives Up Early Against Japanese Yen

The US dollar initially tried to rally against the Japanese yen, but as you can see, we have dropped a bit to show signs of weakness yet again. The ¥109 level is being threatened at the time of writing, and therefore looks even more likely that we are going to go looking towards the 200 day EMA. The market of course does pay close attention to the 200 day EMA quite often, as it is considered to be the longer-term trend defining indicator. That being said, I believe that the ¥107.50 level is much more important than that indicator.

USD/JPY Video 05.08.21

With a miss in the ADP jobs number, it should not be overly surprising to see that we continue to see a little bit of negative pressure, and therefore think it will be interesting to see what risk appetite does next. With that being the case, it is very likely that we continue to see a lot of noisy behavior, and that will be especially true as some of the numbers are suggesting that the jobs number on Friday could be a miss at this point. If that is going to be the case, it will be interesting to see how this plays out across-the-board, not just in this pair.

On the other hand, if we start to see more risk being taken, the market could turn around and take out the highs of the last couple of days, opening up the possibility of a move towards the ¥110 level, but I do not think that is going to be easy in the short term.

For a look at all of today’s economic events, check out our economic calendar.