Sometimes, pictures are more powerful than prose. Below we have shown the last 3-weeks of USD vs. SP500. As the USD stopped going up, SP500 stopped going down. As the USD went down, stocks went up.
I don’t want to make this any more complicated than it should be – not very. This macro relationship continues to be a very dominant signal.
Today, we are watching the USD trade down another -50 basis points, and stocks continue their immediate term ascent. My updated math has the USD Index oversold at the 86.71 line (its currently trading 86.86), and the SP500 overbought at the 768 line (currently trading 766).
In the immediate term, if the USD stops going down, stocks should stop going up.
Keith R. McCullough
CEO & Chief Investment Officer