INSTANT INSIGHT | Where We're Headed: U.S. Dollar, CRB Index & Gold

05/17/16 08:45AM EDT

INSTANT INSIGHT | Where We're Headed: U.S. Dollar, CRB Index & Gold - dollar cartoon 07.02.2014 

Get the direction of the U.S. Dollar right, and you'll get most things in macro right. As we've noted before, the dollar has a material inverse correlation to the CRB index, gold, and the S&P 500. So, with the dollar up three of the last four weeks, that's been a major headwind for the "S&P is gonna rip to all-time highs" crew. It also helps explain why the S&P 500 has been down three straight weeks.

Where do we go from here?

Here's analysis via Hedgeye CEO Keith McCullough in a note sent to subscribers earlier this morning:

"Interestingly, but maybe not surprisingly, the US Dollar Index is starting to stabilize and signal a series of higher-lows (93.11 support) within its bullish long-term setup – consensus (CFTC futures/options) is positioned bearish USD and long Oil and Gold here."

 

https://twitter.com/KeithMcCullough/status/732503483618746369 

Take a look at the chart of the CRB index. Upon closer inspection, the parallels between the commodities index and the U.S. Dollar are fairly obvious: 

  

"CRB Index (19 commodities) looks like the upside down of the USD on a 3yr look-back – inasmuch as USD would have to breakdown and hold below the 92-93 range, CRB would have to breakout above the 190-192 range and my math doesn’t see that happening anytime soon."

https://twitter.com/KeithMcCullough/status/732500207221411840

Then there's gold. We're still bullish ... but only at the right price.

https://twitter.com/KeithMcCullough/status/732501258196504577

More to be revealed.

© 2020 Hedgeye Risk Management, LLC. The information contained herein is the property of Hedgeye, which reserves all rights thereto. Redistribution of any part of this information is prohibited without the express written consent of Hedgeye. Hedgeye is not responsible for any errors in or omissions to this information, or for any consequences that may result from the use of this information.