Max Pain...

Added: 2026-05-22

[00:00:00]Coming up, is the dollar going to break out through the highs of this consolidation channel we've been in? And the same question goes for gold except in reverse. Are we going to see a break to the downside in gold uh after having traded sideways for a little bit? Or could the bulls take it from here? I think a lot of this depends on what happens geopolitically in the next few days and we'll have to keep an eye on that inflation number we just got dropped. I'll show you that in just a second. Meanwhile, oil remains mostly in a range here the last few months. Still sitting around 9750 at the time of recording this for US oil. We'll see where this thing wants to go next, but I kind of think that the longer we stay in this general area, the more inflation problems are going to start to blow out, and we'll keep a close eye on that and talk about it in today's video.

[00:00:44]Meanwhile, stocks remain supported, sitting just shy of all-time highs for the S&P 500. Same thing with the Nasdaq, the Dow Jones breaking back towards its all-time high. And the Russell 2000, nice little recovery here in the last three trading days. And just take a look at the Nikkay already flying right back up here, showing a lot of strength as well.

[00:01:05]And taking a look at geopolitics, we have a live update with Marco Rubio saying that slight progress in Iran peace talks have taken place, but rejects the straight of Formuza's tolling system. And if you haven't heard about this, Iran is wanting to put or uh sort of state a tolling system showing that they are in control of the straightforward moves. And of course, the US is not on the same page of this.

[00:01:29]There's a lot of kind of back and forth headlines here. And someone asked me yesterday, Nick, why are you feeling kind of bullish on the dollar if you have a scenario where they're wanting to end the war? And this is kind of why.

[00:01:40]You are seeing headlines that are going one way and then the other way. And it's very hard to make a definitive statement that the war will be over by X point.

[00:01:49]It's very difficult to do that, especially when you see these sort of obstacles come up where both sides are staunchly opposed on coming to a conclusion on that. And my point there is that it is hard to make a predictive call as to, you know, the war is coming to a close because look at the dollar and look at oil. They still remain elevated from their pre-war levels. I mean, if we go back to the beginning of March, you can still see that the dollar index is up substantially from where that started. Now, I know it's only one and a half percent, but currencies tend to move a lot slower, and that is a meaningful uh meaningfully higher move in the dollar index, which prior to that had been trending lower. Meanwhile, consumer sentiment according to the University of MI uh Michigan's survey uh is at very low levels, 44.8 versus 48.2.

[00:02:34]people are feeling the pinch probably largely because of gas prices being elevated and having been there for a few months that starts to take a toll on people. We also saw University of Michigan inflation expectations jump here as well. So inflation still seems to be sticky and on the rise. And while at first glance it could seem obvious that maybe the big idea here is that you should have shorted oil because the war was going to come to an end, that ceasefires were agreed upon, but it's really not that easy. And the reason I say that is because if you had taken up that thought process back here or over here where we have continuously throughout this whole process seen ceasefires and push backs of military escalation and yet oil is still at this point like 30% higher from where we started. I mean we are still sitting on very high levels uh for for oil price um due to the supply constraints that we are now facing. And so all of that to say, it's not as obvious as first glance. If things were all good and it was very obvious that the end was, you know, right around the corner, then oil prices would be trading much lower than where they currently sit. My point with that is chasing headlines, chasing geopolitical headlines and trying to predict what's going to happen next is a very difficult game to play and one that I actually actively avoid doing.

[00:03:51]Instead, I track the macroeconomic data.

[00:03:53]I track price action and I try and follow along with what I'm seeing, which is oil prices. Yes, they are not at 120 or $200 a barrel, but they're also not below 90 either, uh, or even 80, right?

[00:04:07]You're still seeing every time price comes down in oil, we see buyers stepping up and elevating them once more. And so, you have this back and forth dynamic. And the longer oil price remains around $100 per barrel, the more that inflation problem creeps in. And I want to talk about a concept that we talked about at the beginning of this breakout in the conflict, which is the 90 days above $90 a barrel kind of number that we initially talked about.

[00:04:37]Now, this is not my number. I I heard someone else speaking about it on on television, I think, or something. Uh, but it stuck out to me and I think it's a a rough good point. Basically the research the ideas out there within the economics community is that it's not necessarily about the absolute price of oil. It is the duration at which that price of oil remains uh that level. So if we just apply some simple moving averages here, what you can see is that yes, you had the initial burst in energy prices, but what's more concerning at this point is that you now have these moving averages catching up and sort of averaging out around $100 a barrel.

[00:05:14]Another way of saying that with our initial kind of 9090 number we are at this point if we go back to let's say roughly this is the uh point the war started and let's say we go to where we first reached $90 right you're talking about at this point this day which is by the way this is March 6th or so of this year we're looking at having been elevated above or around $90 a barrel uh probably a little higher than that on average for about 77 days now Why does that matter? Why does the duration matter? Well, let's bring this more locally. You go to your gas station, you spend more than you are used to by a wide margin on filling up your gas tank on an economy that has already experienced inflation for a few years, right? Um the the aftermath of the pandemic was very painful for not just US people but for globally, right? And so now you have this shock in gas prices uh that has not just fizzled away really quickly. A lot of people thought gas prices would come right back down. They have not come back down. And so you have this circumstance in which the pain of the pumps may start to materialize in the form of people pulling back on their personal spending. Maybe they don't go to the movie theater. Maybe they don't go to a restaurant. Maybe they they um cut a couple subscriptions. You take that across the entire economy, which a lot of America uh contrary to to other worldly uh thoughts thinking we're all just swimming in money over here in America. Like a lot of people live paycheck to paycheck. Majority of people in the United States live paycheck to paycheck. That's the new norm. It's a it's a tough world out there. And and prices are higher. Everyone's working.

[00:06:53]You know, households have two sources of income. Mom and dad are both working.

[00:06:56]Like that is the world we live in.

[00:06:58]Things are expensive. And so you take all that and you say, well, what if you double everybody's gas price? And what if you keep it there for not just a week, not just two weeks, not just four weeks, but for three months, 6 months, 12 months. You can start to see how that starts to materialize into a more painful economic scenario for the average household. Then you magnet magnify that across the entire economy, it can start to cause pain. And we are seeing not just that obviously we have gas prices higher but we have talked at length on this channel about how inflation is also meaningfully jumping and on the rise CPI and PPI both measurements of inflation higher than anticipated causing a little bit of pain not just in gas prices but we're seeing it turn into other places right other products other services going up in price in response to elevated oil prices. remember that the cost of oil is something that businesses take on if they go up. They still have to, you know, transport goods. They still have to spend money on on stuff. So, to to move stuff, um, you know, airline tickets have to go up if gas prices go up because the customer uh sort of takes on that added fee that the the airlines are experiencing due to higher fueling costs. So, it is sort of this thing where gas prices oftentimes precede economic recessions for very good reason. It's a very volatile aspect of the economy that can suddenly cause consumer spending habits to drastically change quickly. And so it is something that I am still worried about. I and and I'm not saying this from the sense that like, oh, it's all doom. We're all going to, you know, see the the end of the world. I'm not saying that. I'm just pointing out that if we continue to see inflation rise and oil prices rise, it's hard for me to see a scenario in which we don't have some kind of a pullback, some kind of a struggle in the economy.

[00:08:49]Um because right now this market continues to be pretty narrowly led by the AI stocks in the market. Like you look at semiconductors, they're doing phenomenal. These things are beast mode right now. like data center buildouts.

[00:09:01]That's like the drama recently in the US is like where are data centers going to get planted and who's allowing them to and who's stopping them, etc. But meanwhile, we're all addicted to Tik Tok and Instagram. So, you know, shouldn't we just be applauding give us the algorithms? Anyways, um point is there's a part of the market that's doing really well. There's also a part of the market that's not doing so well. I want to draw our attention here to the consumer discretionary ETF. These are going to be stocks that people I call them the wants stocks, right? There's needs and then there's wants. The wants stocks, these are going to be buying a pair of Nikes.

[00:09:35]It's uh going to Starbucks. It's it's going to Disney, right? These things are wants. They're not needs. People cut them quickly when they don't have money.

[00:09:44]And so, we see these stocks, yeah, they're doing okay. They're not they're not down in the dumps. But notice how they are a very different story than semiconductors, AI chip uh related stuff. Monstrous upside. So not all charts are created equal underneath the S&P 500 uh which is experiencing a lot of gains because of the tech stuff that is running hot. So I just wanted to point that out because I think it's important that we kind of uh decipher what areas are better than others.

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[00:11:05]and stay tuned because they have a very special announcement that they're going to be releasing on this special day. So, make sure you register now before it's too late because it's coming quick. May 23rd, it's a Saturday. I'll be there around several other fantastic traders that I can't wait to speak to. All of the details around the event can be found in the link in the description down below. Now, all of this leads me back to the US dollar asset scorecard, which we've been referencing a lot here recently. When I look at the data here across inflation statistics, the jobs market holding up okay. I see a scenario at least right now where the dollar can be strong. We will get later today our latest commitment of traders data positioning which I'm very interested interested to see. Uh did institutions add to their long exposure to the dollar? What's the crowd sentiment like around the US dollar? We'll talk about these things on the channel. We do have a seasonally strong period of year for the dollar right now in the month of May. And we also have a daily chart uptrend that looks pretty healthy. So I remain pretty bullish on the dollar thinking that inflation could continue to be sticky. And if we take a look at the DXY, what we can see here is that is threatening a potential breakout from a technical basis above 99.3.

[00:12:15]I think that if you can get head and shoulders above where we kind of have consolidated this week, this could be a strong move next week. So I'll keep an eye on it. I am uh currently already positioned long the US dollar through specifically being short the British pound versus the US dollar. So I am in this position. It is pretty much at break even. It is a swing trade. So we'll see how it plays out here in the next coming days and weeks. Yields are back on the rise as well because we got a little bit of Fed commentary that was a bit more on the hawkish side today. He mentioned he can't rule out a rate hike further down the road if inflation persists. And Fed officials seem very focused on inflation now. So more than the jobs market. Six months ago, all of the conversation was around is the jobs market okay. Now the conversation has shifted to is inflation under control.

[00:13:03]And uh as inflation continues to rise, uh yields rise as well, factoring in rate hikes or just simply the Fed not cutting interest rates, which is a very shape-shifting dynamic from the beginning of this year. All of that is also factored into EdgeFinder's analysis of the dollar. With the two-year yield rising, this is giving us a bit more of a hawkish outlook on the US uh central bank, aka a bullish reading on the US dollar. What the edgefinder does is it looks at technical analysis, sentiment, and commitment of traders data to track what institutions are doing as well as a fundamental macro score here to build an overall bias for your favorite charts and assets. If you don't have access to the EdgeFinder, then I want to tell you about today's discount that we're currently running. We're offering a Memorial Day sale for 30% off on the EdgeFinder. You can get all the information you need if you want to pick up a copy during our discount event down below in the description. I also want to disclaim here today and now going forward. We have behind the scenes been discussing we've added a million features to the EdgeFinder in the last few months and really the last year. We have not raised prices on the tool for a long time and we are full transparency.

[00:14:12]I'm telling you now so that people who watch this channel regularly can take advantage of the discounts that we're offering right now. We are planning to raise rates in the ne uh raise raise raise rates raise the price in the coming weeks on Edgefinder. So that is full transparency. I don't want to sticker shock anyone um who has been thinking about getting a copy. But please take advantage of the discount if you are thinking about getting a copy.

[00:14:35]Don't miss out because the price is going up. We haven't finalized everything on that front, but we do plan to raise the cost of EdgeFinder uh over time. Inevitably, our costs to maintain the product and to handle our customer base goes up over time and so our price also goes up. We have not changed it for a while. So, I'm telling you that transparently now. I just don't want to shock anyone who's been like, "Okay, I'm working towards EdgeFinder. I'm going to get it at some point." And then suddenly the price changes on them. Telling you now, full transparency. So, like I said, if you want to take advantage of the discount we are currently running, 30% off can be found in the description down below. And you can also speak to our support team uh if you need some information about uh the product, if you have questions, etc. Turning our attention here to gold as well. What you can see is gold is back down towards the low end of this range. Uh following my bullish outlook on the dollar, I don't have huge bullish outlooks in the short term for gold. Uh now, that being said, I am watching this thing from two different perspectives. In the short term, I think gold has room to actually break lower and keep trending uh maybe back down to perhaps even retest this 4,100 level. I think that that's a very distinct possibility given we have uh a shape-shifting I've used that word uh for a second time today. In terms of Fed monetary policy, it seems like we're definitely more flirting with the idea of rate hikes, which is scary for gold.

[00:15:59]That is not fun territory. Just a reminder, the reason we had such sharp moves higher during the last few years is during the last few years, we had inflation cooling oil prices low, rates uh globally, interest rates getting cut.

[00:16:14]Uh and it was a pretty clear outlook that the next moves from central banks would be rate cuts. Now, not so much.

[00:16:21]Now, we're looking at a scenario where the next move from central banks globally is sort of 50/50 and if anything kind of leading in the direction of rate hikes, especially if this oil thing continues to be problematic. So, um you know, my path of least resistance in the short run is a little bit more focused on thinking gold could trend lower. Granted, on a longer term basis, I've said on the channel many times, I am a long-term uh believer that I think it's a good idea in my own personal portfolio, not financial advice. You do what you want to do. I think long term, I like the idea of owning some gold. And so, I am looking at this from a dollar cost averaging perspective. If we see this thing hit the 200 day moving average, I'm probably going to stick a little in my portfolio, just let it sit there for the long term and perfectly be fine with adding to the position if we saw a move all the way down to, you know, $2,000 an ounce. Not that I think that that is likely, but if it happened, you know, I would I would creatively and patiently buy the dip on gold uh personally. Again, not telling you what to do um on on that because I say that very carefully because listen, first of all, I don't know what the market's going to do. Nobody does with certainty. And there's a lot of people, a lot of pundits on YouTube that will, you know, march around acting very uh uh sure of themselves about knowing what the market's going to do. I actually trying to do the opposite. I don't know what the markets are going to do. I'm following trends, building trades where I'm taking an educated guess uh fully well knowing that I can be very wrong about ideas. But anyways, the reason I say that cautiously is people don't realize also that gold can have very long slow corrective periods. Here's a recent one. Back in 2020 when the world looked like it was going to end, uh we saw gold pretty much go sideways for what is that 1300 days. And if you think that's bad, you know, I always point this out. I I always have fun doing this. Go back to the 1980s and people who bought during that time, which was arguably the worst inflation period in the last hundred years. It was terrifying. People were like, "Oh my gosh, you know, fiat system is falling apart. Nobody can trust the US government, US system. And we saw 10,000 days where gold went sideways. So please understand um just because something looks very bullish does not mean like especially when you're talking about gold, gold can have very long corrective periods. Here's a 3,400 day period.

[00:18:43]Really, I mean all the way here, this is a 4,400 day period where gold went sideways. So gold is one of those things. it rushes all of a sudden to the upside and then it can go sideways for 10 years. So, um it's a difficult thing in terms of investing in gold. Uh it is sort of a weird one. It can produce massive gains. It also can produce nothing for a very long time. I'm a fan personally of holding it in my portfolio longer term. However, from a tailend risk perspective, if the national debts of the world were to blow up, if we were to have some sort of credit crisis, um I like the idea of uh you know, holding gold rather than fiat currency. Um so that is my thought process on it and I prefer personally gold over Bitcoin in that scenario because I know a lot of people love the idea of Bitcoin. I think Bitcoin um is an interesting concept, but to me I have a little bit more faith personally in being long gold than uh in Bitcoin. Hope that video was helpful to you. And I also wanted to make sure to share our Telegram channel with you.

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