Monday, October 5, 2009

Q4 2009: Big Moves Expected For U.S. Dollar, Gold and S&P 500

INO predicts that there will be big move in Q4 2009 for the U.S. Dollar, gold, and for the S&P500. I think they are right, but I do not agree exactly with their predictions.

They have put an educational video that explains all three. It is quite easy to understand and follow.

Watch video here.

They call it the "Potential Mega Trades for Q4". They say: "It seems to me that we are at an inflection point in the economy. The government has blown pretty much all of its money and the economic recovery and the economy is still sputtering along. No surprise there.
So what’s going to happen? I believe that we’ll have another economic downturn which is going to push the dollar to new lows, push gold to new highs, and push the equity markets back down to their March lows".

In essence, they predict the U.S. Dollar to continue to fall (crash), gold to continue to zoom up, and the S&P500 index to fall. Any prediction will be right eventually. It is all a matter of timing. The problem with their prediction is that gold may well go to their $1,200 forecasted, but the current chaos in global currencies will force the U.S. dollar to rebound, which will cause gold to drop first.

Similarly, the U.S. stock market has been going up in great part because the U.S. Dollar has been falling hard. So, both the USD and the S&P500 goingg down at the same time is unlikely. If the S&P500 crashes, there may well be another flight to safety, in the USD. Long term, yes, the USD will go down, it has no other way as the debts will never be repaid. I am working on a correlation study which will further show this point. It should be ready today.

Link to video

Stumble Upon Toolbar


crk said...

I am very much with you on this - in the mid term USD catching a bid and S&P, Gold going down with it. And after that, Gold going for the long run. But in the short term, looks like we are testing the DOW 10,000 level. Could that be the inflection point for the next big correction?

I really like your posts and your straddle strategies. Looking forward for some straddle opportunites in this earning season.

Also, I have a XLF ($15 strike) straddle that will expire October 17th. Do you think it will time decay and lose value? So, should I close my postion or wait? DO you know how to determine the earliest time to close the straddle positions to cut losses?

The Shocked Investor said...

Thank you for the comment. I don't know what the inflation point will be but the U.S. Dollar cannot be let fall much further without causing havoc.

XLF has always been the worse ETF for straddles (compared with IWM and SPY which require smaller moves). If the stocks keep moving up this week, and if I had bought that myself, I'd consider selling the call side, at least partially. Keeping options for next week (expiration) would be too much of a gamble. I cannot know your specific situation though. You have to be in and out of these very fast with the current market conditions. This is not advice!

Financial TV

Blog Archive

// adding Google analytics