Flash Alert! Bullish Dollar A Red Flag For These Sectors

by Vlad Karpel

RoboStreet – April 22, 2021 

Broad Selling On Earnings News 

Buyers of stocks on the prospects of a banner earnings season are taking widespread profits as companies post their first quarter results. The runup prior to the reporting season was pretty compelling, to a point where some market participants are stating that this quarter is going to represent peak earnings for the bull cycle. That’s a bold statement, but one that has triggered some capital outflows.

Summer seasonality can weigh on the market

It is also that time of year when summer seasonality can weigh on the market. The old saying of “sell in May and go away” will certainly be making the rounds in the next couple of weeks. And investors will be hard-pressed to find a new bullish catalyst that the market hasn’t priced in yet. So, while there is strong liquidity in the system, it’s clear there is renewed interest in bond exposure with yields pulling back


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From a purely technical standpoint, the $SPY has started its top building process and has set the top at $418. All sectors rebounded today. The $DXY is reaching oversold levels and started the bottoming process. The $TLT resumed its ascent after a strong rally last week.

SPY in the range between $388 and $420 for the next 6 weeks

I would consider raising cash at this point as the best part of the recent rally is behind us. Based on our models, the $SPY can pull back 10-15% in the next 2-6 weeks. If you are trading options consider selling premium with September and October expiration dates. Based on our models, the market (SPY) will trade in the range between $388 and $420 for the next 6 weeks.

The dollar is back on an uptrend as institutional money is starting to move toward more of a “risk-off” posture. When this occurs, its bearish for commodities and emerging markets as those currencies lose purchasing power against the greenback. Hence, the rally in the iShares MSCI Emerging Markets ETF (EEM) has stalled at a time when the major indexes for the U.S. have traded to new all-time highs.

And while the 7% decline for EEM is not material at this point, our AI platform is predicting a lower move for this all-important ETF that defines this sector. Our Tradespoon Seasonal Chart shows “Lower” probability readings for the next 20, 30, 40, and 50-day periods for EEM.

Other assets that come under pressure when the dollar is in rally mode are Bitcoin and oil. Bitcoin rallied huge this past month, but has suddenly run into a wall of selling pressure as more regulatory risk and speculation have entered the leading cryptocurrency.

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Bitcoin Investment Trust into some real downside pressure

The chart below of the Bitcoin Investment Trust (GBTC) shows recent weakness that could morph into some real downside pressure if the Bitcoin bulls don’t show up to support the shares at current levels.

When looking at the energy sector, I like to apply the S&P 500 Energy Sector ETF SPDR (XLE) as our investment vehicle of choice. When we apply our AI-driven Forecast Toolbox to XLE, we see a near-term downtrend in the making that would have us avoid being long oil stocks for the time being.

It’s these kinds of leading indicators we have from our proprietary AI models that give us a heads-up as to where to direct our investment capital to where it is served best. By employing our system to our RoboInvestor advisory service, we are able to provide outstanding performance for our members.

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Going back to April 2018 when we launched RoboInvestor, we have delivered a Winning Trades Percentage of 91.07%. We have booked profits on 204 trades and absorbed small losses on only 20 trades. To my knowledge, this kind of consistent performance isn’t available anywhere else in the marketplace for retail investors.

We recommend blue-chip stocks and the most liquid ETFs

Within the RoboInvestor system, we recommend blue-chip stocks and the most liquid ETFs the represent market sectors, sub-sectors, commodities, international markets, interest rates, currencies, volatility, and bearish strategies. Our AI platform is always finding new opportunities for RoboInvestor to put to work. Every other weekend we publish a newsletter that has two new recommendations to capitalize on.

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Based on today’s column, we might go long a dollar-based ETF as a trade, just as an example. It just depends on how strong our signals are when we recommend new trades that have a one-to-two-month window of profit potential.

I personally participate in every trade

Take us up on our offer to guide your portfolio through what is historically a more volatile time of the year, that being summer, and for the balance of 2021 and beyond. I personally participate in every trade. We are on this wealth-building journey together. My many years of honing my AI system are always thinking, always learning, and always crunching data to eliminate risk and generate capital gains.

Make RoboInvestor your best trade of 2021 and join today. I personally look forward to welcoming you aboard as a member of our wealth-building community.

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 “I’m investing my own money in each and every stock as my AI platform identifies.”

And remember we’re not talking about day-trading here.  I’m looking for 50-100% gains inside of the next 3 months, so my weekly updates are timely enough for you to act.

Click Here – To See Where I Put My RoboInvestor Money


*Please note: RoboStreet is part of your free subscription service. Not included in any paid Tradespoon subscription service. Vlad Karpel only trades his own personal money in paid subscription services.  If you are a paid subscriber, please review your Premium Member Picks, ActiveTrader, MonthlyTrader, or RoboInvestor recommendations. If you are interested in receiving Vlad’s personal picks, please click here.