Vantagepoint AI Market Outlook for May 1, 2023

Welcome to the Artificial Intelligence Outlook for Forex trading.

VIDEO TRANSCRIPT

Hello everyone and welcome back. My name is Greg Firman and this is the VantagePoint AI market outlook for the week of May the first 2023. Now to get started this week, we’re going to do a broader market outlook. Now again, I am series three and series 34 foreign exchange licensed predominantly working in commodity futures and foreign exchange contracts. This is not an individual stock outlook, but I do look at the broader equity markets using these inner market correlations and predictive indicators.

S&P 500 Index versus $SPY

So when we look at the broader market here, I’m using the S&P 500 as my core market to gauge these inner market correlations. Now, we’ve had a bit of a dip last week, but once again, when we’re looking at using the t-cross long, the predicted moving average by itself, it helps us weed out some of these false signals. Now our predominant the overall primary trend on the S&P 500 remains to the upside.

Now, again, very important when we’re trying to identify what the actual primary trend is. So if we look at the comparative analysis between the S&P 500 and the SPY, we can see that they’re virtually identical. So the S&P 500, yearly opening price 38 53. So with this methodology, we’re looking to buy on a dip, as I’ve talked about in the previous week. We avoid these false selloffs back in March and we use them as buying dips, making sure that we’re using the accurate opening prices, the yearly opening price from January 1st, the monthly opening price from January one, February one, March one, April one, and again on May the first. Also very, very important, so we’re not bringing in lagging indicators or lagging rolling performance. Incredibly important that we understand that.

So prior to the earnings, we had a bit of a move down on the SPYs and the S&P 500, but you can see that they both rebounded at the exact same time, then broke back up above our vantage point t-cross long. So our support for next week on the SPYs will come in at or about the t-cross long 41 10. We have the monthly opening price at 408 85, providing additional support, but firmly above 3 84.

The S&P 500, we see the exact same signal, the breakdown prior to earnings, we spike back up, then we’re holding above the monthly opening, the weekly opening, and again, the very important t-cross long. That level for next week, 41 03 will be our support.

Now, when we look at the additional indexes that we want to look at for potential trades, we would say, okay, if the S&P 500 is moving up, has the Dow Jones recorrelated related back to the S&P and providing a strong signal? The answer is yes. We’re above our weekly opening price, but you can see that the Dow Jones came down, kissed the monthly opening price at 33,245 and then bounced out of there. This is, again, I’ll illustrate this, why it’s important to use these levels. We’ve got the yearly opening price sitting just below that at 33,148. So that heavy level of support down here also assists us to make sure that we’re not getting prematurely stopped out, and as long as the S&P, I would argue in this particular case, the Dow basically told us that the S&P and the SPYs were going to recover.

When we look at the NASDAQ, we can see that the NASDAQ is struggling a little bit here, but it too is recovering back to the upside. Our yearly opening price there, 10,562. Remember when they were telling us back in March to just sell equities and the equities in a bear market? The NASDAQ and the S&P 500 guys have never been in a bear a bear market in 2023. I think the slogan for 2023 should be facts matter. In order for us to enter into a bear market, the very minimum requirement we would need would be to be below, be negative on the actual calendar year. That’s why, again, I would caution people about using rolling performance, taking a date from one year ago from today because it’s not relevant. We started fresh calendar year on January 1st. It’s very important that we’re gauging the strength of the trend in 2023, not dragging 2022 into 2023. So I will stress that point because that’s what allowed us to avoid these false signals back in March.

Also, if you want to look at it, additional strategies, please feel free to sign up for the VantagePoint live training room where I expand on this. This is a brief weekly outlook, but it covers the global markets. So again, the format of this presentation will not be changing. It stays the same. I vary it from week to week, but it is again, mainly foreign exchange and commodity futures, which includes the global indexes, oil, gold, Bitcoin, all of these.

So when we continue to look at these markets, we also want to look at the Russell. Is there any opportunity potentially in the Russell? This very quickly identifies, at least for me, that we can say, okay, the Russell is the one index that is not doing well this year. It is not done well this year at all. So there could be some opportunity if we can break above that very important yearly opening price at 17,093. But again, the t-cross long 1781 is blocking that from us moving forward. So again, there could be some opportunity there, but the very minimum that I want to see is to break above 1781 and ultimately break above 1793.

The other way we can play this, also the monthly opening at 1810, a recommendation going into potentially next week, a very volatile week we’re going to have next week, I’ll warn you ahead of time, but a buy limit order sitting up at about 1812, just above that. Once we’ve cleared all these resistance levels and we become positive on the year, positive on the week, positive on the month and above the vantage point t-cross long at 1781, then we should have a free run on this thing to the upside and there could be some good value. But right now there isn’t. So there is a good correlation forming here, but again, it’s a very different structure between the Russell and the S&P, the NASDAQ, and now even the Dow Jones.

Volatility Index ($VIX)

When we quickly look at the VIX, you can see the VIX is firmly negative below the yearly opening price at 2390, below 2179, and now closing the week below the weekly very negative week, 1945. So as long as the VIX remains below the vantage point, t-cross long at 2016, then we’re looking to continue to buy stocks on a dip. That would be the main play there.

The dollar index, of course, is having a potential, the best way to say it here is the inverse correlation between the dollar and the S&P is still there, but it’s not anywhere near as strong as what it was in 2023. So in most cases, the dollar does strengthen in the first week of the new month until the week after the Tuesday after the non-farm payroll that I discussed in last month’s weekly outlook, which basically hit right to almost to the hour on the Tuesday that selloff. So we should be prepared for that for a week this coming Tuesday. We should again expect some kind of dollar strength, but for now it’s being contained by that stronger move back in the earnings. Meta. Some of these other stocks that have come out are fueling the dollar rally. So we just want to make sure we’re checking everything.

Bitcoin

If we look at Bitcoin, you can see that Bitcoin, again, guys, we’ve got to be very, very careful as to what media outlets we’re listening to. Bitcoin is not only correlated to the S&P, but it’s also been highly correlated to gold contracts. It seems to pick which one it wants at the time, but even if the stock market, or excuse me, if gold goes lower, Bitcoin still rose when the S&P did. So Bitcoin is a very unique asset class. Out of all the cryptos I look at Bitcoin and ETH, those are the only two I trade or invest in right now. That may change in the future, but for now, Bitcoin still looking quite good here, firmly up 16,541, the yearly opening price.

But you can see last week how the weekly opening price, the market used that to springboard off that weekly opening price and extend higher. Yes, we did get that additional assistance from the earnings pushing stocks up, giving us a more risk on environment. But previously in the risk off environment, Bitcoin also rose in 2023. So again, just another example of why we don’t want to drag lagging, rolling performance from 2022 into 2023. It’s lagging. It can be very misleading in our trading. So again, we want to focus on these key levels.

Now looking at that broader market, then what we’ll do here is we’ll go now into the main currencies and some of the other commodities. So if we look at our forex weekly and we split our screens leveraging inner market correlations, guys. My area of expertise I would argue is inner market correlations.

Canadian Dollar versus U.S. Dollar Index

So when we look at this right now, the dollar is climbing yet again, but as we discussed in last week’s weekly outlook, we are still within the broader range. We would need to break down and stay below 100.82. I believe we will get there potentially near the end of May, as long as the Fed isn’t talking about more rate hikes again, which I don’t think he’s going to be able to hike excessively, maybe one more 25 basis, nothing. It’ll be a bearish hike is what it’ll be, and then it’ll pause.

So if we look at again, our main correlation between the dollar index and Bitcoin, there’s still a very strong inverse correlation between these and Bitcoin is the one that’s advancing it again, but I believe it will struggle potentially next week on that known period of dollar strength at the beginning of the month.

Gold

So we also want to bring in our additional commodities. It would be perfectly normal for gold to slide here in its broader uptrend because we have real money demand to buy dollars. Now, currencies again, are not the same as stocks or futures or options or any of these things because nobody’s required to buy a stock or a futures contract or an option, but they’re required to buy currencies, which makes the forex market so unique. Not to mention that the average daily volume is about 6 trillion per day in the forex market. So this is a market we definitely want exposure to.

If we look at this right now, gold is struggling and this is pre-warning me that that period of dollar strength is coming next week. Now we do have a holiday short week. I will advise everybody, it’s going to be really volatile next week. You’ve got the bank holiday in the largest financial institutions in the world in London. Then we’ve got the ADP report, the non-farm payroll number. I think the Bank of Canada and the ECB are in there too. So it’s going to be choppy. So make sure that this is where critical stops come into play here, that we’re not getting prematurely stopped out at the wrong level.

So right now, gold, the level we’ll watch the monthly opening price for the month of April is 16 96. Gold’s done a very good job the entire month and any retracement back, you can see that we retraced exactly back on the 19th to the monthly opening price and then rallied again. But if we break down below, we’re going to get a new monthly opening price for next week’s outlook. I would assume that’s going to come in around 1989. So it’s setting the bar very high for gold to maintain this. If we can’t maintain a positive momentum on the month, then we want to question why we’re buying something, right? But gold is again, firmly up on the year. Just bringing that yearly opening price back in here so we can see it.

18 24 33. Gold’s having a very good year, but you can see that we’re getting into a channel up here that it could be difficult for gold to maintain even if the dollar tanks because the other inverse correlation would be the equity market says money going to go into gold or are they going to go into stocks? In most cases, they usually make the choice of going into stocks. So we’ll watch this one, but right now we’re struggling above that t-cross long 19 91. So number one, we need to get above that, which is like it’s going to be unlikely we do that next week, barring any kind of comments from the Fed, barring any kind of global risk off scenario, which I don’t immediately see on the horizon here, but can change very, very quickly. So watch your key levels. But 1969 still, or 1989 going into the start of the trading week, we need to maintain above that particular level.

But the dollar as we can see, the dollar’s key level here, the t-cross long 101 91, this vantage point predicted moving average has contained the dollar index upside since April the 17th. So I believe that we can take that level out next week, but it will only be temporary. And then we go back down. You can see a wall of resistance up here, significant wall of resistance I might add. So again, when we look at that 103 63, the dollar firmly negative on the year. When we look at, and again, you can see that’s outlined here. We’ve got our monthly opening price at 102 63. We’re staying negative for the entire month. You can see that retracement point to where the t-cross long intersected with the monthly opening price, which is just a no-brainer sell here, guys, and we just plummet off that area.

But that area too, using the monthly and the t-cross long is also very effective for our straddle play. So we sell with the primary trend, but we have a buy limit order ready to go here, and that’s where I think most miss some of these opportunities because maybe they’re using a different moving average. They don’t have a predicted moving average. They’re not looking at the yearly, the monthly or the weekly opening price or the predictive indicators. So again, once that neural index turned negative, the dollar fell pretty hard. Now again, we’ve looked at Bitcoin. Bitcoin will follow either stocks or gold, but Bitcoin one heck of a trade again this year.

Crude Oil

Now the oil contracts for next week, this is where things can get very interesting from a seasonal standpoint. And now we’ve got three levels of support that are building up down here around this low of 73 93. I can advise that there is a very strong seasonal pattern that forms in early May on oil contracts to the long side. So I would watch this level here very, very closely. Now, I will certainly concede we are below our yearly opening price at 80 73 and our monthly opening price at 80 03. Once again, another prime opportunity for a straddle play on this. If one could say, okay, I don’t want to get involved with the volatility next week, and there’s a strong seasonal play coming, so maybe I can just put my buy limit order above 80 73, and when we’re done with the downside and it starts breaking higher, then I’m sitting there waiting for a long trade.

The other alternative you have is I don’t believe that this is a coincidence that we’ve stopped at the same place three days in a row because I know that that seasonal pattern is coming either way, even if the US and globally we go into a recession, do we really think that that’s going to stop people from going on summer vacation driving their cars? There’s going to be real world demand for gas and oil in June, July and August. So in May, usually those contracts start to go up and they usually continue to go up significantly all the way into September. So we’ll continue to monitor that, but keep a very, very close eye on that particular level.

Euro versus U.S. Dollar

Some of the additional forex pairs that we look at each week, if we look at the number one traded forex pair last week, and not a surprise that we got a fake signal, a false signal on this again. We pushed just a hair above 110 76 where they set up a perfect bull trap for everybody and then they get stopped out. Then they go short down here. They’re not realizing the key VP support level at 109 61 is sitting right there.

Now last week with the Euro US also using the vantage point long predicted, you can see that basically every single day last week, it just came down to that predicted moving average and it shot out of there. So strong argument can be made here that there’s enough meat on the bone for everybody. You don’t have to argue or debate with people in forums only long the Euro, only short the Euro. There’s money to be made on both sides here, guys, if you’re using the correct indicators.

So each week I’m biased to the short side on this because I know I’m coming into a period of known dollar strength. I didn’t have the momentum and gold prices for me to keep buying this, but I will buy it as long as it’s above the vantage point t-cross long because the primary trend is up. 107 04 is the yearly, 108 47 is again the monthly. So these indicators are very, very important for me to use.

Now, when I put in the weekly opening price in here at 109 90, you can see that basically the better part of the week, it was holding above that weekly opening price, and we did close positive above the weekly opening price, but just barely. But the main thing here, guys, is that if we look at this from a five-day trading period, then we’re above the monthly, we’re above the yearly. We’re above the t-cross long at 109 60, which I just showed you. And then we use the long predicted here, which is your long-term crossover with just the predicted moving average, not the black line, and every day we extend off of that particular level.

British Pound versus U.S. Dollar

When we look at the British pound, US dollar, we see almost the exact same scenario here. So again, this is what we want to make sure that we’re watching very, very closely. And in this case scenario, I’m just simply using that long predicted to gauge this.

Now, the other opportunity you have is to put both of these predicted moving averages onto the screen and you can use them both. So again, this is what I would strongly recommend because you have the core, which is the long predictive and the t-cross long, which is trend defining. We need a break down below that. So as you can see, we broke the long predicted last week, just barely, but the t-cross long sitting just below there provided excellent buying opportunity on every single day on this thing while the dollar continued to try and break and failed. But I do believe the dollar can break above this next week.

Canadian Dollar versus U.S. Dollar

Now, when we look at the US Canadian pair last week, once again with the US Canadian pair, we can see that we’ve finished the week right on the t-cross long. But as we break above here each day, when we use that, again, the long predicted as a pivot level to enter these trades, it does quite well. And then using the t-cross long to make sure our stops are below there. But once again, the US Canadian pair, the one you really want to watch here is that yearly opening price because at 135 53, we have closed at 135 46. So we’re right back, at the end of the week, all of these gains are gone. We’re right back to where we started. So it’s very important to take profit on a weekly basis to make sure you’re not getting caught.

But my view on the Bank of Canada is that there isn’t enough for them to hike again this year. And the next thing that the Bank of Canada does will likely be a cut later this year or early 2024. That’s my view. But again, if oil prices, if that seasonality on oil kicks in, then you are going to see US Canada drop. The inner market correlation between the Canadian dollar, the positive correlation to the S&P 500 and oil contracts is very strong and could easily push this thing much lower.

Now, the dollar, yen choppy again last week, and it’ll be very choppy again next week. Just be careful with this thing on Monday and Tuesday because as you can see, and we work on this in the VP live trading room, is that this is the carry trade by definition. Once again, the power of just adding the monthly opening price here at 133 03, my view, it stopped at 133 02 and then had a massive rally for the remainder of the week.

Now, this is the carry trade, and again, if you’re holding a position on Wednesday all the way through Wednesday at 5:00 PM they’re going to pay you swap all the way to Sunday or interest rate like a dividend. So obviously big money wants to be long this thing by the end of day on Wednesday, so you can see where we closed. And then Thursday and Friday, this thing goes to the moon. So for next week, the t-cross long again, 133 97, you can expect that level to be tested. But again, we’re in a period of known dollar strength with institutional buying in that first week of the new month buying dollars.

Australian Dollar versus U.S. Dollar

Now, the Aussie and the New Zealand, both of these pairs are likely to do reasonably well next week if the stock market does. But if the stock market doesn’t do well, then you are going to have a problem. Right now you can see we’re below the t-cross long and the long predicted, we’re below the monthly, the weekly, and the yearly opening prices. So 68 17, I believe by mid-May, maybe even sooner, mid, could be between mid-May and the end of the month that the Aussie starts to recover. That’s what I would be looking for here. Now, again, it’s going to be choppy as always, but as long as we’re identifying these things, then we can trade them.

So once again, in this particular scenario, it’s setting the bar very low. We’re closing out here, extremely low on this below 65. So it’s going to set that price for the monthly opening price of May very low. So if we’re holding, again, above the monthly opening price in the first couple of weeks of May, then you want to start looking at longs and focus on the neural index and this heavy verified support low. Now, once again, always remember the verified support and resistance is not based on Fibonacci, it’s based on market data. Fibonacci overlays a series of numbers, numbered patterns onto a range where the verified zones identify failure points in the market based on market data. Very big difference there. Both tools can be very useful. It’s just understanding the difference between them. I always get a lot of questions on that. So hopefully that clarifies that. But the verified zone failure is at the low of 65 74, so be careful of selling below here. The possibility of a bear trap remains elevated.

New Zealand Dollar versus U.S. Dollar

And that same thing applies to the kiwi. You can see that the kiwi is already starting to turn around. I believe that this is being caused by the selling pressure of Aussie, New Zealand, which is based around that Aussie data the other day. But again, we’ve got a verified support low 60 85, a newly formed verified support low that’s coming in at 61 12. So all we have to do is clear the vantage point t-cross long at 61 90 and we can move higher, but we need the stocks going up to support both of these trades.

So with that said, this is the VantagePoint AI market outlook for the week of May the first 2023.