Vantagepoint AI Market Outlook for May 8, 2023

Welcome to the Artificial Intelligence Outlook for Forex trading.

VIDEO TRANSCRIPT

Hello everyone and welcome back. My name is Greg Firman. This is the VantagePoint AI Market Outlook for the week of May 8, 2023. Now to get started this week we’ll begin looking at the broader market. Of course, what we’ll do is we’ll look at the SPYs versus the S&P 500, very similar trade.

SPDR SPY ETF $SPY

What we can assess here, again, using that yearly and monthly opening price and the vantage point indicators along with very strong seasonal patterns, we can see that the SPY has made a big move up at the beginning of the year, 8.39%. Then we’ve moved lower during a period of known US dollar strength, that very strong seasonality, which knocked the SPY and the S&P 500 lower. Then we turned around and we rallied again from the exact same point at that yearly opening price. Again, we want to make sure we’re not using lagging indicators like Rolling Performance, things like that, because it can be very, very misleading.

When we look at this going back, the market actually made its bottom on the SPYs and the S&P 500 for at least for now, which I’ve identified repeatedly over the last several months to avoid these false signals that we put this bottom in. We haven’t made a new low since October the 13th. Again, this is why we want to avoid using that Rolling performance methodology because again, it’s a very much a lagging indicator that can be very misleading because if we start from the wrong point, then again, we can get into pricing that is not accurate, or performance that is not accurate. Once we do that, we look closer at this, we can see again this past week we’ve put a low in using the Vantage Point verified support low, we’ve pushed lower this past week after the Fed, a very confused Fed I might add.

We’ve come down, hit the verified zone for again, that verified low coming in at about 403.78. That low came in on April the 26th. We kissed that on Thursday, and then shot right back up again. Again, we want to make sure we’re always identifying what the primary trend. The primary trend on the S&P 500 and the SPYs has clearly been up the entire calendar year. Whatever happened in 2022, I would be more than happy to leave it in 2022. The last thing we want to be doing is dragging things from 2022 into 2023 with that rolling performance methodol… That lagging rolling methodology.

Again, the primary trend 384, we’ve had a retracement down and we’ve moved back ups, but again, we still are holding below that very important weekly and monthly opening price. But again, this is during a period of known US dollar strength at the beginning of the month where money is… Real money is required to buy dollars.

U.S. Dollar Index

We can see that the dollar at the end of April is starting to move up. Again, we’ve moved up into about the 2nd of May, and then we’ve struggled. We’re holding along that vantage point TCross Long. Now, again, using both of these two powerful predicted moving averages, the long predicted and the TCross Long, that gives us both a daily entry point using the lighter colored blue line, and then the darker colored blue line is that key level of support or resistance. As we can assess, that once the dollar broke down below the TCross Long, we’ve had multiple retracements back to that area, but the inverse correlation between the dollar and the S&P 500, if we know that the S&P 500 and the SPYs are moving up since the middle of October of 2022, we put that bottom in place. Then the inverse correlation is the last thing we want to be doing is going excessively long on the US dollar in 2023 because again, it’s a very different calendar year when the Fed is no longer hiking at unprecedented levels.

Once again, for next week, we look at our TCross Long, 101.82, the dollar has not been able to break through this particular VP level, but we are coming into a heavy verified support low. Now, when we look at the primary… Again, the primary trend here for the year on the dollar is clearly down. We’ve had that short burst of strength in the month of February, which is again, perfectly normal, where real money coming back into the US. There’s that US dollar demand.

But again, going into next week, I would argue that 80% of the time, the week after the Tuesday or Wednesday after the non-farm payroll number and real dollar demand dries up, you see the dollar weakening. Again, I don’t think the Fed really gave the markets anything to have a major sell off, but watch out for that fake move on Monday and Tuesday that we work on in the Vantage Point live training room, that we see this 80% of the time. Whatever the price does on Monday, it does the exact opposite on Tuesday.

If we see that dollar strength on Monday, then you should expect some weakness coming into Tuesday and Wednesday. The indicators here support that. The predicted difference is dropping. We’ve broken the 40 level on the predicted RSI, which tells me we have momentum building, but again, for the dollar to really move lower, we must break below this 100.70 level in order for a new trend of form. If we get below 100.70, we stay below that, then the primary trend should remain down on the dollar for the remainder of the month.

Light Sweet Crude Oil

Now, Light Sweet Crude Oil, some real volatility this past week, but once again, the power of these verified zones and using current methodologies, the yearly opening, the monthly opening, whenever we’re looking at monthly performance, we always want to make sure we’re looking at it at the start of each month because that gives us an exponential look at something instead of a lagging rolling performance. It’s very important that I stress that.

When we look at this, the Light Sweet Crude Oil, that flash crash, which was very interesting on Thursday, I’m not even sure what happened actually there, but we did push down just below 6435, and then we had a very strong bounce out of here. Now, the well-known seasonality in oil, maybe not well known, but a strong seasonal pattern, much like what we’ve recently seen with wheat where we’ve had that spike up in wheat this past week. Now, I would attribute some of that to that dollar strength, but if we look at oil the same way, the verified zone, they basically flushed all of the stops out of this area. The strong seasonal pattern usually starts around the first of… Well, excuse me, about the second week of May. We’re very, very close to that.

They flushed everything out. Now oil is moving higher, but we are still in a pretty strong downward trend. You can see around the monthly and the yearly opening price, there are not a lot of buyers up here, so we pushed down below here, but right now I would say there’s a good chance at the very least next week we can move towards the 75 level, the TCross Long where we can reassess this, but I will speak more to this when I review US Canada for everybody because I believe that US Canada was the tell that this was a fake price to the downside.

The verified zone provided a strong potential entry point inside this yearly range. You can see this goes back to March 20th, of 2023. That’s exactly where the buyers came in. The indicators are coming off the low, we’re rising higher, but the predicted RSI and the predicted differences, we want to make sure they’re continuing to advance next week.

Gold

Now, with gold prices for next week, once again, not a lot of buyers up here. We had that spike, but we can assess that we’ve come down. We’ve touched the vantage point TCross Long at 2004. We need to hold above that. Just below that area, however, is 1989, the monthly opening price. You can see using a current monthly opening price, not a random monthly opening price from 30 days ago from the day we’re looking at it, we want to make sure we’re looking at it from the start of the month because we can leverage that area as a buying or selling opportunity, as you can see what they’ve done with gold. Now, they’ve made a big push, but again, on that dollar, that mile dollar strength from the payroll number. Now the payroll number on Friday, I would argue there was nothing great about that number. If the Fed is looking for a slowing labor market, then my view, it’s there if he’s looking at the proper numbers.

Again, you want to make sure we’re monitoring those revisions. Those revisions were all lowered on the two previous months. I think that that is kind of spooked gold a little bit here, but these are the two levels you want to watch for next week, 1989, and of course the TCross long at 2004. If we break down below that, we’ll have a deeper corrective move. But again, some pretty heavy support down at the 1950 mark. But again, the primary trend on gold for 2023 is clearly up as we hold above 1824.

Bitcoin

Now, when we look at Bitcoin going into next week, Bitcoin once again this year, the top performer in the markets. I think we’re up about 75% here. But if we look at the annualized returns on Bitcoin, 159% on a 10 year annualized basis, the one thing I will point out here and advise on, there’s many different opinions with Bitcoin, but a lot of it is just opinion. When we look at the performance track record, it speaks for itself.

Now, whenever we’ve had a fun fact here for everybody, whenever we’ve had a year when Bitcoin has been down in 50% or more in that year, the next three years have rallied significantly in each one of those three years. This particular cycle that I’ve noticed is already starting again as we’re already up 70, 80, 90% this year. Bitcoin, the TCross Long here, 28816, expects some volatility at the start of the week, but I think we should also remain long on something like Bitcoin, respecting its track record here. The factual track record, not the made up track record that some of the industry pundits are talking about, but I mean factual annualized returns.

Again, that cycle of whenever Bitcoin has had a big, big down year, the next three years consecutively have been very, very strong at 80% or higher in each one of those years. It is important that we do look at these. Right now, you can see that our neural index strength is up. Our predicted differences are a bit of a mixed signal there, but the predicted RSI is actually suggesting we’ve got upside momentum building. We just need to break through the immediate verified zone high at 29983, and then retarget the higher level at just under 31,000. If we can break through that, then we could be looking at a bigger run to the upside. When we look at this from a nine month period, you can see that resistance going back. It is significant, so be careful around that particular level.

S&P 500 Index

Now again, the S&P 500 is basically the same trade as the SPYs on the ETF side, but you can see that the S&P 500 has recovered also off the same low point here. That comes in at 4049. The market is tricked into believing that it’s dovish again. Some pundits are even calling the S&P in a bare market. It’s very difficult to make that call when the S&P 500 is up this amount.

Since our last retracement point, if we look at that where we’ve opened back here for that last significant rally, we can assess right now that the S&P 500 as of Friday is up almost 8% on the year. Another strong move up buying on dips from that accurate performance level. The yearly opening price, guys, this is the one we want to really focus on. If the S&P 500 breaks down below 3853, then we officially enter into a bare market, but we must stay below that particular level, which it simply has not been able to do.

Euro versus U.S. Dollar

Now, when we look at some of our main 4X pairs for next week, of course the euro is at the top of that list, a lot of volatility, but a lot of opportunity. You can see that buying consistently off of that vantage point TCross Long has been a very, very good place. For next week, our TCross Long, 1.0982. Watch out for a Monday stop-loss hunt, but look to buy on a dip here. I believe the verified support low should hold, because again, the Euro US is 100% inversely correlated to the dollar index. Until such time we get a confirmed buy signal, or a trend change in the dollar index, then buying the Euro on dips is the preferred strategy. The indicators are warning that we’re basically running sideways here on the predicted RSI, the predicted differences. Neural index is pointing… Expected weakness on Monday after the non-farm payroll number as the market digests that very important payroll number, which in my respectful opinion only, was not a strong number and does not benefit or support the Fed red rate hikes in any way, shape or form.

U.S. Dollar versus Swiss Franc

Now, when we look at some of the additional US dollar pairs, the US Swiss Franc, now on a real flight to safety, what I am seeing as of late is money has been going into Bitcoin. It’s been going into the Yen, and it’s been going into the Swiss Franc, but it has not been going into the US dollar. That whole flight to safety argument, the US dollar is a reserve currency. I don’t know if it’ll be able to maintain that status or not. That will be left to be seen. But for now, whenever we have any kind of risk off scenario, money is absolutely going into the Swiss Franc.

Now, that level right now, our TCross Long, that’s coming in… We’ll just back that chart up a little bit so I can see that a little clearer. When we go click on there, we get our TCross Long, .8943. Again, the month of May is normally a very strong month for the Swiss Franc from a seasonal standpoint. Again, we could have some additional selling opportunity, but you can see that our neural index strength to start the week is actually somewhat bullish. I believe that is going to be accurate for at least a couple of days, but be on the hunt or on the lookout for a potential short here following that dollar weakness, because again, I don’t think the Fed… The Fed is saying he’s not going to cut this year, but I’m certainly not convinced of that because he said he was only going to hike to 0.95 in 2022 and he ended up hiking over 4%. He can flip-flop and start cutting just as quickly as he hiked. Don’t forget that. Right now, the indicators are rather neutral on this particular pair.

British Pound versus U.S. Dollar

Now, the pound dollar feeding off of that US dollar inevitable weakness. It was able to contain it until about Wednesday and then you can see on Thursday and Friday they’re just bailing out of dollars and going into just about any other currency. Now, the British pound also has a high correlation to oil contracts, not just the Canadian dollar. I believe that to be one of the strong drivers of this pair. I believe we could have a decent month with the British pound this month if the seasonal in oil holds true. Our key level there TCross Long, 1.2476, keep it long while above this particular level. But I would like to see us hold above the monthly opening price, that level coming in at 1.2559. The indicators still remain bullish for this particular pair, but again, I would be cautious about buying it before Tuesday of next week.

U.S. Dollar versus Japanese Yen

Now, the dollar yen really getting hit with volatility this week. Again, you can see as the stock market falls, the correlation to the yen is very strong, and that inverse correlation between the equities and gold, but the yen is a high correlation, as does the Swiss Franc, to gold contracts. Again, we’ve tried to recover. We’ve closed above the TCross Long for the week at 134.70, but you should expect considerable volatility on anything that has the yen in it because the market is very conflicted on the Fed on a number of different global geopolitical issues. The list is a mile long here, so expect additional volatility. But in this particular case, we haven’t broke down below the 40 level on the predicted RSI, which suggests that we could recover here. But I still feel that this pair is overvalued even at this particular level.

U.S. Dollar versus Canadian Dollar

Now, with US Canada, we’ve seen a considerable spike on US Canada towards the end of the week to the downside, both to the upside and the downside. But when oil turned around, you can see… I would argue here, and again in my respectful opinion only, that US Canada was a leading indicator to tell us that that seasonal pattern in oil is still intact because somebody is buying the Canadian dollar heavily across the board against most pairs, the Euro, the British pound, here against the main pair against the US dollar. Significant spike down. You should expect some kind of retracement here on Monday. Be careful with that. We would tend to focus our entry points towards that Long predicted 1.3532, so I would hold out for Shorts until we get back up into this zone up around the yearly opening and monthly opening price. But again, if oil does spike higher, consistently higher, then the CAD will drop very quickly, but I think we will pause when we get down to our next verified support zone. That comes in at approximately 1.3302.

The indicators here, and I will point out this, I’m not one for… Because this is an outlook, not a recap of something that’s already happened. I don’t like to go back and show something that’s already happened, but in this particular situation, it tells us the power of that [inaudible 00:18:57] diff cross. The pink line over the blue line, this is both a trending indicator and a contrarian indicator. That’s why it’s one of my favorites. You can see, when it crossed, ultimately it was just a matter of time before this pair broke down. When we bring in that powerful seasonal pattern with oil, it doesn’t surprise me at all that we move down that quickly.

Now, if the CAD can continue to the downside, then this should continue to push the Aussie and the Kiwi up. You can see how it responded positively to this move in the US Canadian pair. I would group these three currencies, the CAD, the Aussie, and the Kiwi as our equity-based currencies. They’re still tied to commodities, but again, when we’re this week, when we look at our current monthly opening price, not 30 days back from one of these particular dates. That really doesn’t tell us anything. We need that all important monthly opening price. You can see how the market uses this pair also to springboard higher. If it’s as bare-ish as they’ve been telling us this week, then we would also be negative on the month, where we have not been. We have positive for the entire month.

Australian Dollar versus U.S. Dollar

Now, my view is that we are going to challenge .6817, but a risk off scenario could hurt the Aussie very, very quickly. Make sure you’re keeping up with current events that there isn’t something, or a meltdown in the stock market. It will have a very negative effect on this pair, same the Kiwi, the New Zealand US. We’re going to likely move towards that yearly opening price at .6350, but if we’ve already broken down below the yearly opening price on the US CAD, it’s telling me it’s just a matter of time before these two, Aussie US and New Zealand US, they ultimately break higher and feel that same type of strength with the Canadian dollar. But again, we can get out in front of these things by using powerful indicators, like the VP software, like the yearly and monthly opening price.

New Zealand Dollar versus U.S. Dollar

In this particular case, I was watching this pair like a hawk last week because soon as we cleared the monthly opening price, the current monthly opening price, we also cleared the vantage point TCROSS Long. The very next day, we spring boarded off of that and we were holding above the Long predicted. Again, when it comes down to getting out in front of these moves, machine learning will always be your best bet.

With that said, this is the VantagePoint AI Market Outlook for the week of May the Eighth, 2023.