Chart Of The Week: Breaking The Buck

Suffice to say, the masses are beginning to figure out this inverse relationship. AFTER things really move, that's what revisionist historians do.

 

Over the course of the last 3 weeks, this REFLATION trade has really been amplified (see chart). While last week's down -2.5% week-over-week move in the Dollar probably created capitulation short covering in everything high short interest, that certainly doesn't mean that this inverse USD/SPX correlation will cease to exist.

 

If you're looking for lines in the USD Index that matter, here's what I'm using:

 

•1.       USD immediate term oversold = $82.69 (bounces from that line will create short term selling pressure in stocks)

•2.       USD immediate term TRADE resistance = $84.15 (all market selloffs should be bought/covered, provided that USD can't close above that line)

•3.       USD intermediate TREND resistance = $85.71 (that's the big line that matters; trading below it with the SPX holding above 861 will remain bullish)

 

Immediate term TRADEs and intermediate term TRENDs are what I am addressing here. No matter where you go in this market, these durations will dominate daily price action in everything on your screens.

 

In the long run, if the USD breaks down and closes below $81.11, this REFLATION party won't be so much fun anymore. Instead of smiling when I see a consensus short seller getting squeezed, I will be getting very weary of the US Financial System's long term viability. For now, whatever credibility this conflicted American system has left needs to be respected, above all else.

 

Rather than buying the SP500 (SPY) this morning, I re-purchased the Technology (XLK) and Healthcare (XLV) ETFs. On a relative basis, these 2 sectors need less financial engineering than others to survive any legitimate economic stress test. No, Timmy Geithner didn't have a US Dollar crash in one of his multiple choice test boxes.

KM

 

Keith R. McCullough
Chief Executive Officer

 

Chart Of The Week: Breaking The Buck - chart12


Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more