To The Moon

Last night, I hosted a livestream on Tiger’s futures channel to discuss shifts in the U.S. dollar cycle. We explored whether it was time to buy the dip in gold, along with trading approaches for currencies, crude oil, and U.S. equities. If you missed the livestream, you can watch the replay here >>

假期中美長債利率先升後降，黃金抄底的時機到了嗎？ - To The Moon

Below, I have organized the key takeaways from the session and my main trading views by topic. I hope this will give those who did not have time to attend a quick overview of my perspective on the current market. First, a brief introduction to my background:

My Main Takeaways from This Session

In this livestream, I focused on the opportunities and risks across asset classes as the U.S. dollar cycle shifts. My view is that the dollar may enter a period of strength. For now, investors should not rush to buy the dip in gold, should watch for downside pressure on the euro, and should wait for a signal of a change in direction in the renminbi. Even those with a bullish view on crude oil need to pay close attention to their choice of near-dated versus longer-dated contracts. For U.S. equities, it is particularly important to establish exit levels in advance. Rather than committing to a single directional view, I place greater emphasis on managing risk first and identifying trading opportunities second.

The Dollar May Enter a Period of Strength, and Rate Hikes Could Outpace Market Expectations—Prepare for Volatility First

In my assessment, the dollar is at a turning point in its cycle, moving from depreciation into a range-bound phase, with the potential for an upward surge lasting several months. This does not mean a crisis is inevitable. It does, however, mean that investors should plan their cash allocations, hedges, and position management in advance, rather than waiting until volatility intensifies.

• October as a potential turning point: Based on my past investment experience, February and October are the months in which market turning points are more likely to occur. As we enter October, the risk of market volatility deserves particular attention.

• Assessment of the Fed’s rate-hike schedule: The probability of a rate hike at the October policy meeting is only around 20%. Under its usual pattern, the Fed does not adjust interest rates in months that do not mark the end of a quarter. The key point to watch is the pace of rate hikes in December.

• Patterns in the U.S. dollar cycle:$美元指数(USDindex.FOREX)$ $做空美元指数-PowerShares(UDN)$

The cyclical pattern of the U.S. Dollar Index has been borne out by 30 to 40 years of historical data. At the beginning of the year, I noted that the dollar’s depreciation cycle would come to an end. The September rate hike formally confirmed that we are now at a critical juncture, transitioning from a six-year depreciation phase into a range-bound phase.

Historically, this transition has been prone to localized or global market turmoil. Two major episodes associated with such transitions were the bursting of Japan’s economic bubble and the 2008 subprime mortgage crisis.

• Approaches to managing risk: Investors need to develop a risk-management mindset ahead of time. Localized risks can be addressed by shifting assets into safe-haven categories, while a global crisis can be managed through measures such as hedging and holding cash.

• The window for a dollar surge: The U.S. Dollar Index’s upward surge began this September and is expected to last six to eight months, extending into the first quarter of next year. This provides a clearly defined window for the associated volatility across assets.

Trading Opportunities Across Asset Classes During a Range-Bound Phase

Do Not Rush to Buy the Dip in Gold—Distinguish a Rebound from a Trend Reversal

If the dollar strengthens for a period, gold and other precious metals may continue to see mainly modest rebounds. A bounce following a decline should not automatically be interpreted as the start of a new uptrend. Whether the Fed pivots toward rate cuts and monetary easing will be an important indicator of the scope for further upside.$黄金主连 2612(GCmain)$ $微黄金主连 2612(MGCmain)$ $1盎司黄金主连 2612(1OZmain)$

Watch for Euro Weakness, and Wait for a Signal of a Change in Direction in the Renminbi

Against a backdrop of dollar strength, the focus should be on potential downside opportunities in the euro. During the livestream, we discussed the possibility of EUR/USD moving toward parity. This was a scenario assessment, however, not a firm price target.$欧元主连 2612(EURmain)$

For the renminbi, the first step is to watch for a signal of a change in direction, rather than rushing to adopt a directional trading stance.$SG人民币主连 2612(UCmain)$ $HK人民币主连 2612(CNHmain)$ $小型SG人民币主连 2612(MUCmain)$ $HK人民币主连 2612(CNHmain)$

Even If You Are Bullish on Crude Oil, Choose the Contract First

I do not recommend taking directional trend positions in near-month crude oil contracts. Investors with a bullish view could instead prioritize crude oil futures expiring roughly six months out. These contracts currently trade at a discount of around 12% and carry lower risk.

$美国原油ETF(USO)$ $WTI原油主连 2611(CLmain)$ $微型WTI原油主连 2611(MCLmain)$ $小原油主连 2611(QMmain)$

Set Exit Levels for U.S. Equities Before Considering Further Upside

Use the middle band of the Nasdaq’s Bollinger Bands as a reference for risk management. A break below that level should prompt immediate action, such as exiting positions, hedging, or buying put options.$纳指100ETF(QQQ)$ $纳斯达克(.IXIC)$ $微型NQ100指数2612(MNQ2612)$ $NQ100指数主连 2612(NQmain)$ $纳指三倍做多ETF(TQQQ)$

Additional attention should be paid to the risk of market volatility after the November midterm elections have concluded. Clear rules for triggering risk-management actions should be established in advance.

Do Not Rush to Chase a Breakout—Use Three Steps to Filter Out False Signals

Baseline-range filter: Use the value of a common indicator, such as a moving average, as a baseline. Measure how far prices have typically moved beyond that baseline in historical trading, then establish a monitoring range that exceeds those usual deviations. Confirm a breakout only when the threshold is reached.

Higher-frequency data validation: Plot the indicator value from the daily chart on higher-frequency candlestick charts, such as 30-minute or hourly charts. Examine how prices consolidate and break out around that level to confirm the validity of the signal.

Closing-price confirmation: Confirm the signal based on whether the daily closing price has broken through the indicator threshold. This method is the most effective at filtering out false signals but is also the slowest to respond, making it better suited to trading major trends.