This is the most dominant driver of today’s macro market move. It’s driving the VIX higher and the SP500 lower.
Right after the ISM Prices Paid report (accelerating inflation) was released this morning, the US Dollar began to strengthen. Then, like our old friend Jimmy Braddock (Cinderella Man) coming back from the ropes, Pop, Pop, Bang! The US Dollar has put on quite a move. The Buck was a Ball Underwater.
In the chart below, we have painted the lines that matter:
- Immediate term TRADE = $78.54
- Intermediate term TREND = $79.81
While we respect that bottoms are processes, not points. We understand what it means when a fighter like Braddock starts to ring the market’s consensus bell. Reflation traders, it’s time to get out of the way. Dollar up = everything else down. Let this Ball Underwater go to where its inertia takes it. This is not a TREND, but it packs one heck of a TRADE punch.
Keith R. McCullough
Chief Executive Officer