FINANCIAL ICEBERG
Always consider hidden risks
 TECHNICALS
US Dollar Index/SP500: A Risky Mix?
 October 26 2016 ​( From TradingView , CNN)
If you would like to receive our free daily markets updates, please Sign-Up



The Situation

​​​​In these range trading times (good to know that​​ the
Fear and Greed Index ​from CNN Money is coming from the
​Greed Zone three weeks ago to the ​Neutral Level now at 47).
It is
​interesting to look the behavior ​of the US Dollar Index ​​(USD-DXY) ​
​and the SP500 Index.


The US Dollar Index broke on October 10 2016 the Major Tesistance
that started back since December 2 2015​.
(See first chart below - TopBlue Trendline)  But most importantly,
broke a day later the Reistance of an Uptrend Channel.  
(See first chart below): Since then, we are evolving within a steep Uptrend Channel and reached on October 25 2016 on the DXY Index a level last seen in February 2016!

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)​ and peaked on August 23 to consolidate thereafter. ​(See second chart below - Bottom Panel - Thick Grey Trendline - Ellipse)

​​​​​​As shown by the second chart below, the economic impact of a strong US Dollar on US exports on a macro scale is quite direct. A strong US Dollar is having a negative effect on the US exports, already in negative territory on a year over year basis in percentage. (See second chart below - Middle Panel - Blue Area)
​Another consequence of a strong US Dollar is to bring inflation pressure down...
​​

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 October 25 2016 a new high ever (prior highest ever was July 22 2016) and at the resistance trendline that started back in March 2015. As domestic investors had their breakout on July 8 (SP500 Index), foreigners are near making one on their own standard major breakout (SP500 times DXY Index)...   ​(See Third Chart Below - Top Blue Trendline - Ellipse)

Foreigners will dictate the trend for the SP500 in the next few trading sessions, especially with month end quite near...




US Dollar Index/SP500: A Risky Mix? $SPY, $SPX,  USDX #Trading #dxy  #usdollar #SP500 #spy 



​US Real Exports of Goods and Services
(Year over Year in % - Left Scale)​

​US Trade Weighted Dollar Index
​ (Inverted - Right Scale)​

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