Always consider hidden risks
US Dollar Index DXY: Weakness to Prevail?
 August 16 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 ​Extreme Greed Level now at 81).
It is interesting
​to look the behavior (correlation) ​of the US Dollar Index ​​(USD-DXY) ​and
​the SP500 Index.

The US Dollar Index broke on June 24 2016 the resistance of a Daily
(See first chart below - Blue Trendline - Ellipse)  But most importantly, we failed to break the Major Resistance Trendline that started back since December 2 2015 (See first chart below - Top Blue Trendline - Ellipse)
​Since July 25 2016, the US Dollar Index is Weakening and well into a Downtrend Channel. It broke on August 15 2016, a tiny support trendline, indicating that the recent weaknee to prevail on a short term basis.

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 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: Weakness to Prevail? $SPY, $SPX,  USDX #Trading #dxy  #usdollar #SP500 #spy #stocks

US Dollar Index - DXY ( Top Panel )​
DXY over SP500 Correlation ( Middle Panel )
​​SP500 Index ( Bottom Panel )
US Dollar Index - DXY 
​​SP500 Index
​(Daily Candles)
US Dollar Index - DXY 
​(Daily Candles)