The buck has broken out.

The U.S. dollar rallied yesterday to its highest level in two months. It has broken out to the upside of a bullish pattern. And there’s more upside ahead.

Here’s an updated look at the chart of the PowerShares DB US Dollar Index Bullish Fund (UUP) I showed you on Friday…

This chart has broken out to the upside of an ascending triangle pattern. Ultimately, UUP should work higher towards the $24.20 resistance level.

As I mentioned on Friday, though, nobody is going to get rich trading UUP for a $0.50 move. Buying into the commodity sector right before the dollar peaks is the more profitable trade.

If you’ve been reading the Market Minute over the past year, then you understand my affinity for gold stocks. I’m a firm believer that gold and gold stocks will be significantly higher in the future than where they are today.

But, admittedly, I have been cautious – maybe even bearish – on gold in the short term. And the main reason for that has been the bullish look of the dollar chart. After all, if the buck looks bullish, then gold – which often trades inverse to the dollar – has to be bearish.

So, I’m waiting. I’m hanging out on the sidelines and waiting for the dollar to finish its upside move.

Once that happens, the gold sector should be poised to rally. And, I’ll happily make multiple recommendations to help folks profit off the move.

The best buying opportunity for the gold sector is probably going to happen just days before the US Dollar Index hits resistance. Stocks, after all, tend to discount future moves. So, the bottom in the gold sector is going to happen before the peak in the US dollar.

So, here’s the bottom line… The dollar has broken out to the upside of a bullish pattern. It’s likely to run higher for the next several days. And the gold sector (GDX) is likely to run lower.

But the bigger picture for gold stocks is bullish. Traders should be looking for opportunities to buy into the gold sector on weakness.

Six to 12 months from now, you’ll be glad you did.

Best regards and good trading,

Jeff Clark

P.S. While I’m waiting for a low-risk, high-upside setup in the gold sector, I’ve been digging up promising earnings trades for my Delta Report readers.

In fact, I sent them an early trade yesterday (subscribers can access it here) with the potential to earn over 60% in the next couple months. And this one’s special… because one of my favorite stock market anomalies supports the case for a breakout move.

To learn more about this anomaly, and how you can use it to find similarly promising trade setups, click here.

Reader Mailbag

Today, we hear the latest from Delta Report subscribers…

Hi Jeff, my first execution with SPY in two days was awesome!

– Sandra

I loved the educational update you gave us in Delta Direct at 2:45 Friday using the 5-minute chart. I appreciate the time and effort you took to give us that type of information. You didn’t need to, but you chose to. Thanks!

Also, thanks to your heads-up in a possible dollar spike and pullback in the gold sector, I was able to take almost $300 in profits in DUST in only a few days. Look forward to doing that again sometime. Thanks again!

– Clarissa

I love Jeff’s service and was able to take a couple of nice profits on the XOM and KMI trades recently.

– Paul

Jeff, one of the things I appreciate more than ever is the learning and education I get from my colleagues and professional associations. It’s great to get a tip or two, but when I find my behavior changing that’s when I know the association is of great value. You have provided that to me time and again. When looking at any trade, the first question in my mind is “what would Jeff do?”

A week before your XOM recommendation you were talking about energy sector leadership. I started buying naked puts on the XLE and HAL. Along with XOM, it worked out quite well. You made a bullish call on WMT. I applied the same approach on HD. Your view on the 2581 S&P was another great opportunity. Shorting SPY as we approached 2680 was spot on, and learning from you I not only shorted SPY but sold the SDS puts.

Thank you for being the educator that you are. The markets are so very complex and at times irrational. I also want to thank you for providing a sense of control and risk management while we make very good profits. I like taking what we are given and not swinging for the fences.

– Mike

And a response to Friday’s essay on the dollar…

I shorted yen three weeks ago, expecting the dollar to strengthen up nicely but not as much as hoped.

– Bob

Thank you, as always, for your thoughtful insights. Keep them coming right here.