Everyone focuses on the daily gyration in the stock market, but in many ways there are more important things happening. The US dollar index began a bear market this summer and had the biggest monthly drop it experienced in decades this past July. That brought it into a deeply oversold condition in August that led to a mere bounce – not a rally – but just a bounce. Check out how the RSI oversold indicator got below 20 coming into August.
In a bull market such oversold readings as the US dollar index got to in August lead to big rallies. But when currencies are in a bear market all you see instead is a very weak drifting sideways action that lasts several weeks and sometimes even a few months that can’t bring any real gains as oversold conditions get worked off with a dull drift instead of a ripping rally. Then the currency starts to fall again. Now the US dollar index isn’t on a new low yet, but it is simply drifting with an RSI back up close enough to overbought territory that shows that the upward momentum lost steam.
This is the type of thing that happens in a stage four bear market in a currency.
Now the good news is that gold, silver, and mining stocks tend to move opposite to the US dollar index. So when it is weak they are strong. My top silver stock for this month is now in a position to breakout and surge. Take a look at its chart.
The upper 20-day Bollinger Band for Silver Dollar Resources is at $1.83. Notice how the Bollinger Band width indicator on the bottom of the chart is trading below 20. The two bands are super tight together to suggest that this triangle consolidation pattern is close to resolution. This may be the best stock to buy now to profit from the next decline in the US dollar index before the year is over. It’s all about positioning now for what is to come and this is a new stock with heavy hitters involved. It trades under the ticker SLVDF on the US OTC and SLV on the Canadian Securities Exchange.
For the full details on the company read my post here.
-Mike
Disclosure: Mike Swanson owns shares of Silver Dollar Resources, Inc. Because it is a small cap stock with a market cap of less than $100 million he has put himself on a trading blackout on it and will not buy or sell a share of it for at least 30-days from the date of this post. Wallstreetwindow.com, is owned by Timingwallstreet, Inc., which is being compensated by a third party (Leadgopher LLC DBA Pinnacle Ad Network) to conduct an investor awareness advertising and marketing campaign for Silver Dollar Resources, Inc. This third party paid Timingwallstreet Inc., $23,000 to produce and disseminate this and other similar articles and send traffic to them through paid advertising online campaigns for 30 days beginning October 1, 2020. This compensation should be viewed as a major conflict with our ability to be unbiased, more specifically: This communication is for entertainment purposes only. Never invest purely based on our communication. For more on trading risks read our policy statement by clicking here.
