What a boring day in the stock market. I almost forgot it was even open, and my kids were off school. I took one of them to the mall to shop for clothes. Of course, we were shopping for her, not for me.
Somehow, gold has managed to hold on to support in the $4,000 to $4,200 region. I just don’t think that is likely to last much longer, because it appears to me that the dollar index has further to climb.
From where I’m sitting, the dollar index is at a point where resistance doesn’t appear until roughly 103.5. The potential inverse head-and-shoulders pattern also suggests the dollar index could head back to that level, if not further, with a measured move from the head to the neckline projecting the DXY to nearly 108.
Since April 2025, gold and the dollar index have returned to their usual inverse relationship. So, if the dollar strengthens as much as I think it could, gold probably won’t survive that move and will likely fall back into the mid- to even low-$3,000 region.
The KOSPI has fallen nearly 9% over the last four trading sessions, and on four-day bars, it’s clear how much the South Korean market has fallen apart over that period. The index has broken below an uptrend and is now sitting at support near 6,380. The stronger Korean won is contributing to this.
At this point, USD/KRW has fallen through support around 1,340, so the next support level is probably around 1,335, followed by 1,305. Generally speaking, I don’t think this is a good omen for the semiconductor sector here in the US either.
Hopefully, tomorrow will be more interesting. It is CPI eve, after all, and I will be watching to see how much they ramp up the 1-day VIX ahead of Wednesday morning’s news event. I’m going to take a wild guess and say the 1-day VIX closes above 8, and maybe it even hits 15.
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