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US Dollar Index DXY: A Must Follow for Stocks?
 September 8 2016 ​( From TradingView , CNN)
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The Situation

​​​​In these Greedy times (good to know that​​ the Fear and Greed Index
​from CNN Money is coming from the Fear Zone at the end of June
​​on ​the Brexit fears to the Greed Level now at 65).
It is interesting
​to look the behavior (correlation) ​of the US Dollar Index ​​(USD-DXY) ​
​and ​the SP500 Index.


The US Dollar Index is still within a Major Falling Wedge. (See first chart below - Blue Trendline - Ellipse)  
​After failing to get over the Major Resistance Trendline that started back since December 2 2015 (See first chart below - Top Blue Trendline - Ellipse) ​, the US Dollar Index broke a Support Trendline that started on June 23 2016 (See first chart below - Yellow Trendline). Then it broke on August 15 2016, another support trendline, indicating that the recent weaknes to prevail on a short term basis. We are now near testing a Major Support Trendline that started back since May 3 2016. (See first chart below - Blue Trendline - Ellipse)

For the SP500 index, it started a Bullish Trend from the post-Brexit panic on June 27 2016 to make a Breakout on July 8 2016 (from a Major Resistance Trendline that started back on May 20 2015)​.
​(See second chart below - Bottom Panel - Thick Grey Trendline - Ellipse)

​​​​​​As shown by the second chart below, the correlation between the US Dollar Index and the SP500 Index (on a Weekly Basis) tells that the risks have ​not ​started ​to be fully priced into the foreign exchange market yet in ​terms of volatility: expect more volatility in the US Dollar and SP500 in the next few weekly sessions...​​

​​​​DXY/SP500 correlation getting near the +0.70 zone, ​indicating foreigners more involve into the US equity market: expect higher volatility ahead as history suggest... ​(See second chart below - Middle Panel - Blue Area - Ellipse)
​Past occurrences of high weekly correlation between the US Dollar Index DXY and the Mighty SP500 Index was always a warning of a consolidation in stocks in the next few weeks as history suggest.
(See second chart below - vertical white lines)​

But very few of us realize that for a foreigner looking at the SP500 Index on a Macro Basis (so in US Dollar Index - DXY times the SP500 Index) we did finally reach on July 22 2016 a new high ever (prior highest ever was November 30 2015) and at the resistance trendline that started back in March 2015. As domestic investors had their breakout on July 8 (SP500 Index), foreigners are seeing their total market value weakening
​(SP500 times DXY Index) since July 22 2016...   ​
(See Third Chart Below - Top Red Trendline - Ellipse)

​If we continue to see the US Dollar weakening, the party will be over for US Financial Assets in terms of performance and low Volatility...



US Dollar Index DXY: A Must Follow for Stocks? $SPY, $SPX,  USDX #Trading #dxy  #usdollar #SP500 #spy #stocks


US Dollar Index - DXY ( Top Panel )​
WEEKLY CORRELATION​
DXY over SP500 Correlation ( Middle Panel )
​​SP500 Index ( Bottom Panel )

Financialiceberg.com
US Dollar Index - DXY 
times
​​SP500 Index
​(Daily Candles)
Financialiceberg.com
US Dollar Index - DXY 
​(Daily Candles)
Financialiceberg.com