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More than three years ago in my post titled, “Don’t Get Trapped By Recent Dollar Weakness”, I shared with you a monthly chart of the dollar index (DX) futures with a map of large two-leg complex sideways consolidation. It was an experiment to try guessing the time target for the second blue leg to the upside based on the time it took second red leg to emerge.
Below is the updated chart with the same drawings enriched with the new highlights.
Source: TradingView
The time target was set on November 2020 when 33 bars in the second blue leg up emerge. The price had established the new top of $104 in March 2020 within those 33 bars. However, the minimum target of $114.2 on the price scale had not been reached and now 54 monthly bars appear on the chart.

If we divide 54 by 33 we will have the ratio of 1.64, which means the time period extended over the 1.618 Fibonacci ratio. This is a crucial time mark and last month the dollar index futures were really close to hitting the price target as it topped $109.1.
The next extension of doubling the time period with 66 bars to emerge falls on August 2023. It is enough time space for reaching both preset targets of $114.2 and $121.3.
I added two indicators on this updated chart. The purple one is the Volume Profile. It clearly has shown the strong barrier at the $98 level with the large volume traded there. When the price broke above that resistance, the speed of growth accelerated. It is the resistance being the strong support now. We should watch it closely in case the price drops there during correction.
The Simple Moving Average for the past year period is the blue line on the chart. It had accurately shown the reversal to the upside last year. The moving average confirms the support area of the Volume Profile indicator around $99.6 making it a double barrier for bears.
Three years ago the majority of readers misread the direction of the price as they bet on the drop of the dollar.

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In the next chart, I could get a better visualization of the real interest rate comparison between countries and areas involved in the composition of the dollar index posted in June.
Source: TradingView
Now this chart above shows the real interest rate differential on the scale B: blue line for U.S. – Eurozone, orange line for U.S. – U.K. and the red line for U.S. – Japan.
I highlighted with the purple rectangle the area where the dollar index (black bold line) bottomed last year. It coincides with the valley of U.S. – Eurozone (the largest component of the DX) and the U.S. – U.K. (3rd largest component of DX) differentials around minus 3.3%. The following rapid growth of the dollar index was clearly supported by the rising gap of the real interest rates, which has scored over 5% change from the bottom.

Most of you were absolutely right voting for the ongoing superiority of the U.S. real interest rate over Eurozone and U.K.
The gap with Japan (2nd largest component of DX) has bottomed much later only this spring. Anyway, it has added to the narrowing from minus 6.7% to the current minus 3.3%.
We can see that the dollar index still has ammo to continue moving higher. The room over 2% is a huge buffer for the dollar’s domination.
Intelligent trades!
Aibek BurabayevINO.com Contributor
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

A recent survey from Vanguard showed the median account balance for Americans 65 and older was just $87,700. The median amount saved by Americans aged 55 to 64 was just $89,700. The average for both age groups was much higher at $256 thousand for 55 to 64-year-olds and $280 thousand for those 65 and older.
However, these numbers are very concerning, considering these individuals are either in retirement or near retirement age and don’t have enough saved up to retire.
The reality is that while the amount of money those in their 50s, 60s, and older have saved for retirement is not likely enough to give them the retirement that many of us dream about, there is not much we can do to help them at this point.
Many of the greatest investors of our time have all used the power of compounding returns to grow their vast fortunes. Warren Buffet, one of the wealthiest individuals in the world, while an outstanding investor in his own right, acquired the vast majority of his wealth late in life because of the power of compounding returns, not extraordinary investment picks.

Unfortunately, those in their 50s or older just don’t have as much time on their side as is required to realize the power of compounding investment returns.
While the younger generations have more time and opportunities to grow their investment wealth, the issue is that many young people don’t understand the importance of investing when young. A recent report from Morning Consult showed that half of Americans aged 18 to 34 were not yet saving for retirement, and only 39% of those who were, started in their 20s.
We often hear the same old lines from those who now wish they had saved or even just started investing earlier in life. “I was never told/taught about investing.” “No one explained why investing young was crucial to growing a large investment account.” “I just didn’t have enough money to save when I was young/younger.” There are obviously more excuses, but in my experience, these are the top three.
If you are reading this article, you care about your investments. Therefore, you either had someone explain to you the importance of investing, or you taught yourself after realizing why investing was so important.
Regardless, the most crucial step when it comes to saving for retirement isn’t where you put your money or even how much you invest; it’s having a conversation with someone about saving and investing for retirement.
The earlier in life that someone is taught about retirement savings and why it is so important to save even a tiny amount at an early age, the better off they will be when they retire.
For example; if you invested just $4,500 per year for 45 years, you would have over $1 million, and if that 20-year-old had an employee who did a 401k match, they might only have to save $2,250 per year (employer matching the other $2,500) and still end up with the $1million.
Another way to think about compounding returns is this. If you contribute $1 at the age of 20 and get a 4% return rate, that $1 would be worth $5.84 when you turn 65. (figures are based on zero inflation and illustrate the power of compounding returns, not purchasing power over time.) If you contribute $1 at the age of 30, it will be worth just $3,95 when you turn 65. $1 at the age of 40 will be worth just $2.67 at 65. $1 invested at age 50 will only grow to be worth $1.80 by turning 65.

When investing, time is your friend if you are young and your enemy if you are older. So be a friend to someone else and make the biggest impact on their life as early as you can, by simply talking to them about investing and explaining the importance of starting early. So the sooner someone starts, the more they will need to invest in getting to $1 million.
If you need suggestions about what they should buy, keep it simple, recommend the iShares Core S&P 500 ETF (IVV), the Vanguard Russell 2000 ETF (VTWO), or the Vanguard Total Stock Market ETF (VTI). These are basic, straightforward investments that will allow anyone to benefit from the stock market’s compounding returns.
Matt ThalmanINO.com ContributorFollow me on Twitter @mthalman5513
Disclosure: This contributor did not hold a position in any investment mentioned above at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

Please enjoy this updated version of weekly commentary from the Reitmeister Total Return newsletter. Steve Reitmeister is the CEO of StockNews.com and Editor of the Reitmeister Total Return.
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The recent rally in stocks (SPY) has been impressive. But it is still officially a bear market and there are 5 reasons that bears will not be waving a white flag soon. Lets review why stocks rallied… why they are likely to stall at this level… and the 5 reasons why the bearish argument will likely win the day.
Stocks have been rising nearly unabated for 2 months. A lot of that was because it was easy for stocks to “climb the wall of worry” created by the initial decline into bear market territory.
Meaning that it was fairly easy to find just enough silver linings or things not going as bad as advertised for stocks to bounce from that recent bottom. However, as we are finding out now… all good things must end.
Meaning that investors finally found resistance at the 200 day moving average of the S&P 500 (SPY) at 4,326 and retreated quickly from that mark into the finish line on Tuesday. Expect this level to denote the near term highs for the market as we likely enter a consolidation period with trading range to follow.
Why? And what is the parameters of this trading range? And what will cause us to break out of the range?
Market Commentary
Technically speaking… we are still in a bear market. That certainly is confusing to many investors given several weeks of upward price action. So let me spell it out for y’all.
The definition of a bull market is when you come out of a bear market and have risen 20% from the bottom. Well the recent bottom for the S&P 500 (SPY) is 3,636.87 and yet yesterday we closed at 4,305.20 which is 18.38% above the lows.

It may sound like mincing words to keep calling it a bear market as its pretty close to 20% above the lows. However, I think its an important distinction at this moment to help set up a true battle for the soul of this stock market.
The bulls have indeed grabbed the upper hand over the last 2 months. But a lot of that was just “climbing the wall of worry” as the market does quite often. That being where sentiment is so bad that it only takes things coming in a notch worse than horrific to spark a rally. And once the rally is under way you get the FOMO part where folks are afraid of missing out on the upside potential.
It is one thing to say things are not truly that bad versus saying they are good enough to promote the full re-emergence of the bull market. That is why the 200 day moving at 4,326, also known as the long term trend line, provides a very interesting battle ground for investors.
Check out the intraday chart from Tuesday below to see how stocks flirted with the 200 day moving average and then quickly reversed course

It is my strong belief that there is not enough serious bullish sentiment to create a break above the 200 day moving average at this time. On the other hand, the bears have more to prove to make their case. This creates the perfect environment for a consolidation period and trading range.
Yes, the relationship between high inflation and recessions/bear markets to follow is very strong as can be seen in the chart below:

However, until this starts showing up in a weakening of the employment market and/or earnings session for corporate America… then it is hard to make a serious case to push much lower. And thus the tug of war between bulls and bears should commence now.
Top of the range should be the 200 day moving average at 4,326 and the bottom of the range is likely the 100 day moving average at 4,100.
Reity, why do you continue to stubbornly call for a bear market when clearly other investors have spoken given the strength of the recent rally?
Because I have an economics background. And high inflation goes together with recessions and bear markets like peanut butter and jelly. It’s really just a matter of time as the chart above shows. So it may not have happened yet, but the problem still looms large.
Second, we have an inverted yield curve which is one of the most time tested indicators of a looming recession and bear market. Why? Because bond investors are saying that they see a recession coming in the long term that is by its very nature deflationary. So rates will be lower in the future than they are now.
Third, the Fed is feeling a bit too good about the economy which they take as a green light to raise rates like crazy in coming months. Bond investors have already weighed on this notion with the inverted yield curve which means they think the Fed will help generate a recession. Stock investors are likely to get the memo again once they see the damage appear in employment and/or corporate earnings.
Fourth, the weekly jobless claims reports is the leading indicator of what will happen with monthly job gains. That has been going the wrong direction since mid March. Note that it is generally understood that once jobless claims gets above 300,000 per week is when the unemployment rate starts to weaken. That wake up call may not be that far in the future.

Fifth, that this feels like the long term bear market of 2000 to 2003 that started with the popping of a valuation bubble and later had to deal with a recession. That is why you will see in the chart below that it took about 3 years of drops, followed by seemingly impressive bounces and then more drops to finally find true and lasting lows in March 2003 before a healthy new bull market could emerge.

Will this bear truly last 3 years?
Maybe. Maybe not. But I am simply saying the battle is not over which is why I think stocks will stall out at these levels awaiting some clear catalyst for a convincing breakout in a bullish or bearish direction.

My money is clearly on it breaking bearish for the reasons stated. But indeed, I am open for the bullish premise to win the day. That is why our hedged strategy is the right one for the time being. That being equal allocations to inverse ETFs and long stock positions.
As stated in Monday’s trade alert:

“If we do break above the 200 moving average with gusto and there is more reason to be bullish, then we will start to sell our inverse ETFs and start adding more stocks.
On the other side, if my thesis is correct that this is a long term bear market and we start to retreat, then we will do the opposite. Which is to sell off the stocks and perhaps add more inverse ETFs. Proof of that would likely be falling back under 4,000.
Simply you can think of a hedge as the start of a tug of war with both sides equally matched. Whichever side starts pulling ahead…then we jump on the bandwagon to join the winning team.”

I think that last paragraph pretty much says it all and will leave it there for now.
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Wishing you a world of investment success!
Steve Reitmeister… but everyone calls me Reity (pronounced “Righty”)CEO, StockNews.com & Editor, Reitmeister Total Return

About the Author
Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.

It’s been a roller coaster ride of a year for investors, with the S&P-500 (SPY) finding itself down more than 20% year-to-date in one of its worst starts ever before clawing back following a slight deceleration in CPI sequentially (8.5% vs. 9.1%).
One of the hardest hit groups this year has been the Retail Sector (XRT), with a considerable portion of the sector suffering when consumers adjust their spending habits.
While this has led to some investors steering clear of the sector, some names tilt more towards staples than their peers, like Walmart (WMT), and some discretionary names have seen large enough corrections that a harder-than-expected landing for the economy looks mostly priced in.
One stock that fits the second bill is American Eagle Outfitters (AEO), which is down over 65% from last year’s highs even after its recent rally.

While I wouldn’t be in a rush to buy either name with the market short-term extended, I believe they belong at the top of one’s watchlist if they pull back towards support. Let’s take a look below:
Walmart (WMT)
Walmart released its fiscal Q2 2023 results this week, trouncing estimates with revenue of $152.9BB, up 8% year-over-year after a much stronger second half of Q2 than planned.
While this didn’t lead to any improvement in quarterly earnings per share, which dipped 1% year-over-year ($1.77 vs. $1.78), this was partially due to markdowns taken to reduce inventory levels in areas where it had risks like apparel.
Given the better-than-expected Q2 results, the company is now more upbeat about its fiscal Q3 performance, especially as it enters the period with cleaner inventory and as some consumers look to trade down, hit by rising fuel costs and mortgage rates.
Walmart’s positioning as a beneficiary of trading down is a big deal, but it won’t be immune to a weak economic environment. However, it could see migration from premium retailers to lessen the blow.
It also continues to see solid growth in its Walmart+ memberships, providing some insulation as less affluent customers curtail spending in some of its discretionary segments.
This tailwind from growth in Walmart+ and its heavy staples weighting makes WMT a name to own.
(Source: FASTGraphs.com)
Looking at the chart above, we can see that WMT has historically traded at 20.1x earnings (10-year average), and the stock is currently trading at ~21.7x earnings at a share price of $141.00.
This is a premium to its historical multiple, but it was during a period when Walmart struggled to grow annual EPS (2023 estimates: $5.70 vs. $5.02 in FY2023.
However, looking ahead, WMT is expected to see an acceleration in its growth rate, with annual EPS estimates sitting at $6.50 in FY2024 and $7.16 in FY2025, with its earnings growth rate expected to come in at 14% in FY2024 and 10% in FY2025.
This should command a higher earnings multiple of 26, translating to a fair value of $169.00, pointing to a 20% upside from current levels.
While this might not seem like much upside, Walmart has a much lower beta than the market and an attractive dividend yield of 1.70%, making it a nice defensive play for investors looking to maintain exposure to the market but with lower risk.
That said, I prefer a minimum 25% upside to fair value to justify starting new positions.
So, while I think WMT is a name to own in Q3 and Q4 in a weaker economic environment, I see the low-risk buy zone for the stock coming in at $135.00 or lower, suggesting the better move is to buy on dips vs. rush in above $141.00.
This would coincide with a pullback to its rising 25-week moving average (pink line), which will likely provide support during any pullbacks now that it’s been reclaimed.
(Source: TC2000.com)
American Eagle Outfitters (AEO)
Unlike Walmart, which just came off a surprisingly strong report, American Eagle’s Q1 2022 report in May was a stinker. This was partially due to difficult year-over-year comps after lapping government stimulus and a wardrobe refresh in Q1, but it was also self-inflicted.
The issue was that the company came into the year with a more bullish outlook than it should have been, not considering the possibility of weaker demand in a more difficult economic environment.
Due to this misfire, the company exited the quarter with much higher inventory than planned (also impacted by a colder Q1 that hurt swimwear sales). It will now have to shed some of its inventory, resulting in weaker than expected margins as it ensures it has a fresh fall line-up.
That said, its Aerie business had another strong quarter, up 8% vs. difficult comps in Q1, and this segment is now sporting a 27% three-year revenue CAGR, easily offsetting the softness in the American Eagle segment.
However, as the earnings trend shows below, we’re expected to see a plunge in annual earnings per share [EPS] related to clearing through spring goods, higher freight costs, and higher store wages.
So, even if American Eagle meets current annual EPS estimates, it will see annual EPS tumble to $1.16, down from $2.19 in FY2021, a 47% decline year-over-year.
(Source: FASTGraphs.com)
While this is a terrible-looking earnings trend, it is worth noting that annual EPS should rebound in FY2023 and FY2024 as freight costs should moderate, and American Eagle should see some benefit from its Quiet Logistics acquisition.
So, while an ugly Q2 report is on deck and the company is up against clear headwinds from a weaker consumer, there is a light at the end of the tunnel with earnings set to rebound sharply.
Besides, while the short-term outlook isn’t as pretty, the stock is now priced at its most attractive levels in years.
(Source: FASTGraphs.com)
American Eagle has historically traded at 15.0x earnings (15-year average) and is currently sitting at just 9.0x forward earnings at a share price of $13.20 (FY2023 estimates: $1.46).

This is a dirt-cheap valuation for the stock. Even if we assume a more conservative multiple in a recessionary environment that doesn’t favor consumer discretionary names, I see a fair value for the stock of $17.52 per share (12x FY2023 estimates).
So, with a 33% upside to fair value, I would expect any pullbacks to provide buying opportunities.
(Source: TC2000.com)
Looking at the weekly chart, we see that AEO remains in a downtrend but is just above a multi-year support zone at $11.00 per share.
This reinforces my view that the negativity is priced in and that we’re sitting near a lower-risk buy point. Hence, any retracements below $12.60 should provide buying opportunities.
American Eagle and Walmart may not be the most exciting ideas and certainly don’t have nearly the growth rates of high-flying stocks like Celcius Holdings (CELH). Still, both stocks offer attractive dividend yields (5.2% and 1.7%, respectively) and look to have found bottoms after multi-month downtrends.
So, for investors looking to add long exposure at reasonable valuations, I see WMT and AEO as attractive, with buy zones of $135.00 and $12.60, respectively.
Taylor DartINO.com Contributor
Disclaimer: This article is the opinion of the contributor themselves. Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information in this writing.