Market Update: Negative Interest Rates, Gold And US Dollar

Remember that having an outlook and opinion about where the market seems to be going is intellectually stimulating, but NEVER allow an opinion or prediction about the market influence your investment and trade decisions. Your investment/trade decisions must be strictly based on the fundamental/technical rules you have learnt (e.g. long only on clear uptrend). Never ever attempt to ‘Predict’ the market or outsmart it. It almost always leads to disaster.

The market is a dynamic place that changes all the time. This is why we should never stubbornly hold onto an opinion. Once the market proves us otherwise, we need to change our strategy and go with the trend. A good example is Gold. My opinion was that gold is on a long term and medium term downtrend and should stay that way for the next 5-10 years or more. Any rallies should be short term in nature and merely rallies on the larger downtrend.


What is happening now in the Gold market may prove my thesis wrong and I may look to go long on Gold if the new trend is confirmed. Since Japan lowered their interest rates to NEGATIVE and The US Fed is now contemplating the possibility of negative interest rates as well (are they mad?!!!), Gold has broken its downtrend resistance, broken above its 200 Daily Moving Average (DMA) and looks like it has reversed into a new uptrend.

If you look at the Gold ETF below (GLD), you can see the price is above the 200DMA (200DMA sloping up) red line and 50MA blue line about to cross above the 150MA green line.

So, would I enter now? Not yet! The price has gone up too fast and furious and it is too far away from the moving averages already. So, the prudent thing to do is to see if the price will pull back, find support at the 50, 150 or 200DMA and buy if it continues the uptrend. So, this is a great lesson on how I can change course very very fast, the moment the market changes and new factor are on play.

Gold Chart – Feb 2014 to Feb 2016

The USD Pulls Back

Talk of the US Fed cutting rates to negative (I don’t think they will lah, just talk only freak people out already…. my Singlish acting up again ) instead of raising rates as earlier anticipated, has led to a  pullback in the USD. As far as USD/SGD is concerned, the medium term trend is still up (50DMA above 150DMA) and the price is finding support at the 200DMA as you can see from the chart below. Since the price bounces off the 200DMA and continues the uptrend, it would be a nice strategy to buy more US$ as it makes a dip on the uptrend.

USD/SGD Chart – Feb 15 to Feb 16

Markets Continue Looking Really Bearish

Markets have become more bearish. The S&P 500 broke below its trending support and is firmly on a downtrend. If you look at the S&P 500 chart below, you can see a bullish divergence and Williams %R below -80 , indicating a potential relief rally in the next few days. So, short term, S&P 500 should rally but medium term, it still looks like its going down. Any long positions would be very short term in nature…. with a preference towards more short positions when the setup opportunity arises.

S&P 500 Index Chart – Jun 15 to Feb 16

Asian market are not faring any better. Japan plunged 5% after announcing the insane negative interest rate policy. Singapore STI fell the least last few days… why? because drop too badly last few months until need to take a breather (see, Singlish acting up again)… before maybe dropping some more (:-)).

Once again, as I mentioned during the seminar, stocks look real cheap right now. So, start doing your research and get ready your shopping list and only start thinking of going long only when the markets can confirm an uptrend. Meanwhile, best to steer clear of too many long positions.

Note: This post was first published to our Wealth Academy Graduates on 14th February. If you have no clues to what I had explained, I would suggest you to attend my free 3 hour financial and investment workshop today.

Chart sources are from Thinkorswim platform, by TD Ameritrade.

About your author

<center>Adam Khoo</center>

Adam Khoo

Chief Trainer in Wealth Academy™

Adam Khoo is an award-winning Singaporean entrepreneur, best-selling author, professional stocks & Forex trader and peak performance speaker. Adam conducts Wealth Academy™ Program on a quarterly basis to educate the public about value momentum investing using deep fundamental and technical analysis approach.


Any content in this presentation should not be relied upon as advice or construed as providing recommendations of any kind. It is your responsibility to confirm and decide which trades to make. Trade only with risk capital; that is, trade with money that, if lost, will not adversely impact your lifestyle and your ability to meet your financial obligations. Past results are no indication of future performance. This course presentation is not meant to be a recommendation to buy or to sell securities nor an offer to buy or sell securities. The publishers of Adam Khoo and Adam Khoo Learning technologies Group Pte Ltd (AKLTG) are not brokers, dealers or registered investment advisors and do not attempt or intend to influence the purchase or sale of any security. AKLTG does not guarantee the accuracy or completeness of the information displayed. This is shared purely for educational purposes only. 

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *

Other articles you might be interested:

5 Highly Effective Ways To Grow And Bulletproof Your Wealth (Part 2)

At the bare minimum, we would want to ensure that rate of return on our savings is at least equal or higher than the rate of inflation. This is crucial because inflation generally causes the prices of most things to rise over time.

How To Profit By Using "Insider Trading" Information

In this article, we are exploring perfectly legal ways of utilising insider trading information to help us in our trading decisions. Simply because we are going to look at ways of getting public “insider” information that anyone can access at any time on the Singapore Exchange (SGX) website.

5 Highly Effective Ways To Grow And Bulletproof Your Wealth (Part 1)

As the high costs of living in Singapore has seemingly become the norm (we are ranked the most expensive city to live in for the third year running), are there better and more effective ways to grow our wealth?
guaranteed stamp

Guaranteed Returns In Investing?

From time to time, we tend to encounter investment schemes that “guarantee” a certain rate of return (often in the range of 20% per year and above) and have a relatively short exit timeframe. Sounds too good to be true?
single way

The Single Most Effective Way To Become Wealthy

Interestingly, if you invest early you could be getting more returns using less capital than if you were to start later. How is that possible?

When Was The Last Time You Upgraded Yourself?

In today's fast paced world, have you ever paused for a moment and asked yourself, “When was the last time I upgraded myself”. And more importantly, is your current skill-set still relevant?

Are You Stressed Out By Your Current Job?

In a recent news report, it was revealed that a growing number of young professionals are suffering from burn-out. Due to extra-long working hours, more and more young people are also suffering from medical problems such as insomnia, depression and hypertension.
market update

Market Update: Moving Forward

If you look at the big picture of the S&P 500, you can see that over the last 1 year, it has been in one big consolidation period ever since peaking in Mid 2015. In fact, it has been making lower high points. This looks to me like a consolidation distribution period which may lead to a new bear market.
female lady using laptop

Survey shows 2 in 3 young people have not started investing

Millennials want to invest but lack the financial knowledge to do so, according to a new survey. Around two-thirds have not started investing, said a report by GYC Financial Advisory. Of these, 61% do not invest because they do not know how to..