The dollar is due for a bounce which will put pressure on metals and stocks, to a lesser degree. As one can see, sentiment is at an extreme and needs to reset.
We expect the $1850-$1870 futures price level to hold on the first pullback. This will usher in a bounce into the second half of August. How high remains to be seen but it will be a tradable bounce as dip buyers come out in force. With no event or crisis, it is highly unlikely gold breaks through $2000 on its first try. A sustained breakout above $2000 will come in the fourth quarter of this year. We have remained firm on this forecast throughout the year. This will be by far the strongest metals rally of recent years in the fourth quarter with gold breaking above $2000 and never looking back. After gold pulls back, our thinking is to take a position in metals, on August 10-11th, for a nice bounce. As of now, a larger sell-off should occur during the second half of August. $1750 should not be breached from here forward.
We expect a strong push in stocks early this week. A 800-1000 point day is not out of the question, striking our 3400 target before some consolidation. Higher prices are coming into late August. Focus on the bigger picture and get rich slowly with your positions. Equity markets will remain supported into early September.
We will sell USO ($33-$35) when crude oil strikes our target of $49. We are confident we will see this no later than early September, but most likely late August. Expect natural gas (UNG) to continue rallying and follow oil higher into late August / early September.
Institutional buyers add to existing positions in DENN and BLMN every day as both continue to receive upgrades from many banks. We need break-outs over $12 in BLMN and $10 in DENN to ignite a strong multi-day rally that should last 3-5 trading days.
Overnight, Bitcoin struck a new yearly high of $12000 (GBTC $15). Our target for September is $15000+, GBTC $22+.
SPCE is on our trade list waiting for a pullback to the $20 level. Virgin Galactic is here to stay.
The steel sector has a cycle low being generated for early August. All of the steel names should perform well. We believe this will be one of the strongest steel rallies in some time. We like CLF due to its current short position and iron ore mining business which supplies other steel companies aside from itself. We are hopeful of a trade to trigger this week in CLF.
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