What Happens If the Dollar Breaks? Commodities, Health Care, and the Calm Before Volatility

1) US DOLLAR - What could trigger a “super cycle” for commodities? A US Dollar collapse. Is that possible? Well, in market space almost anything is possible, but the question is, is it probable? Below is a chart of US Dollar Index Futures, going all the way back to 1996. This is a rising channel, and it’s been intact for two decades! And right now, it’s on the edge of a cliff. Here’s what nobody wants to talk about: When the dollar rolled over in the early 2000s, it didn’t just decline - it collapsed. And that collapse lit the fuse on the greatest commodities super-cycle in modern history. Gold went ballistic. Oil went ballistic. Everything went ballistic. Right now, we’re testing that bottom channel. This is one reason we’ve seen such a monumental move in things like gold and silver and other metals…smart money is trying to front-run a dollar drop. I have no idea if the channel holds or the US Dollar fools everyone and rips higher. But that is also a possibility. Short term, if the Dollar breaks above 99.32 and holds, it would revert to bullish TREND, which would really frustrate investors. Right now, I’m neutral on the Dollar with the bias still downward as it is currently bearish TREND. I’ll change my mind when (IF) that breaks.

2) HEALTHCARE - Since peaking in 2021, this sector has gone essentially nowhere in absolute terms.  Investors lost interest, capital rotated elsewhere, and attention shifted to shinier objects.  But now, the S&P 500 Equal Weight Health Care ETF (RSPH) quietly closed at a new all-time high.  Not the cap-weighted version, dominated by a few mega names; the equal-weight index, where participation actually matters.  Biotech looks the same… strong.  What's happening now is a wave of acquisition activity in this space.  And here's the part people keep missing.  Even after months of gains, bearish positioning remains significantly elevated relative to history.  Shorts have covered, but not nearly enough.  The squeeze isn't over.  Not even close.  Health care and biotech have been consolidating for years, while the rest of the market has run ahead.  Now they're catching up, while everyone is worried about what might go wrong.  That tends to be a good combination. 

3) VIX – VVIX is still signaling a lower low with the potential to hit 95.71 (currently at 91.86).  I’d expect it to fail near there.  That bearish TREND in volatility of volatility is good for VIX to stay fairly muted as well.  VIX is still also a bearish TREND with resistance at the 17 area…which is also near the top of the daily TRADE range.  Low end of that TRADE range?  All the way down at 12.11.  This just increases the probability that VIX decelerates from here with the potential test at the 17 area.  What’s all that mean?  That while we could see a short-term move higher in market volatility, the TREND is still lower.  That tends to be good for market price.  Money tends to move toward assets with decelerating volatility.