All About The Dollar

The SPX is bumping up against resistance here this week in the 950s at the same time the dollar is teetering on major support here around 78 on the dollar index and Euro hitting 1.425. This is not a coincidence as the US dollar is a great signal to confirm a move in the stock market. Stocks bottomed in March the same day the dollar topped. It is a handy relationship that will remain true as long as the dollar is treated as a "safe haven" and stocks in the US are denominated in dollars.

So what's next? Well we are def on the brink of a big move in either direction. It's just tricky to know where. Stocks have run really fast in the last week straight into resistance at the same time as the dollar index fell from 81 to 78. It seems like risk appetite is back on the table for the time being. I do think the Euro and cross rates like the EUR/JPY want to go higher into the next several months. The Euro is much more bullish than Euro/Yen overall so it should be interesting to see if they diverge much more. If the Euro breaks 1.43 I think you can easily see it get to 1.46 quickly.

Looking at the SPX I didn't really like the end of day selloff but you gotta still have a long bias until we lose 940. I tend to think we could trade lower in the next week however. We have that big gap below us down at 906 from last week. It is waiting to be filled. And gaps on the SPX almost always get filled so keep that in mind.