DXY - The Most Important Correlation to Watch!
There is an old saying in technical analysis… If you can get the dollar right, everything else follows. So what are we seeing? We are seeing the dollar trending downwards.
Dollar trending down has been one of the “machines” favorite things to chase as of late. There is a very high correlation to down dollar, up stocks. There is also a strong correlation to down dollar, up commodities. Again we also have down dollar, up emerging markets. Another lesser known correlation is down dollar, up crypto! If we break 92 on the DXY we can aim for the next target of 78. If we go to 78 on the DXY, we would probably see the SPX at 4000!
So as the old saying goes, you get the dollar right and everything else follows! Keep in mind that there is a point when the falling dollar becomes bad for the bond market, and when the bond market starts going, then the stock market soon follows. For time frame, there can be 6 - 12 months before the intermarket trouble spills over to another market. So keep your head on a swivel!
Dollar trending down has been one of the “machines” favorite things to chase as of late. There is a very high correlation to down dollar, up stocks. There is also a strong correlation to down dollar, up commodities. Again we also have down dollar, up emerging markets. Another lesser known correlation is down dollar, up crypto! If we break 92 on the DXY we can aim for the next target of 78. If we go to 78 on the DXY, we would probably see the SPX at 4000!
So as the old saying goes, you get the dollar right and everything else follows! Keep in mind that there is a point when the falling dollar becomes bad for the bond market, and when the bond market starts going, then the stock market soon follows. For time frame, there can be 6 - 12 months before the intermarket trouble spills over to another market. So keep your head on a swivel!