Possible Divergence in the Dollar & Market
- Posted by TheArmoTrader
- on December 12th, 2011
I have been paying attention to the Dollar index for the past 2 weeks and one thing I have noticed despite the market strength, is that the dollar is hanging tough. I still feel as though we can have a end-of-year rally even if the dollar was to not sell-off. I think a breakout over the $DX_F ~80 level would make it hard for the market to rally, but as long as we stay range-bound (which is very possible especially with all the Euro $EURUSD news), I think a rally could be fully sustainable.
Why do I think a divergence can happen? Because I am already seeing signs of it. The market has rallied and been in “buy the dip” mode since the Thanksgiving low, yet the dollar has just stayed mostly flat.
Here is what I am seeing.
Here is a candlestick chart of the Dollar Futures ($DX_F) with a line chart of the S&P 500 ($SPX). As you can see, over the past 3-4 months, when the dollar has rallied, the market has sold off, and they both peaked and based practically concurrently. However, as you can see in this latest rally, the dollar relatively did not sell off that much. And as you can see, over the past week or so, as the market remained in “buy the dip mode”, the dollar just hung out. I think we can see a range between 77.75 ish to 79.75 over the next month in the Dollar.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Jerry Khachoyan is currently an undergraduate student at UCLA pursuing a degree in Political Science. He started trading in September of 2008. He concentrates on using technical analysis and reading the tape to enter the best risk/reward trades. The stock market to him is one of the greatest inventions by man.
- What’s Going On In Markets?
- No, Government Spending Is Not Exploding
- Now THIS Is Resistance
- Stocks Keep On Trucking
- Rooting For A Choppy January
- Is Gold About To Move Higher?
- Predictions for 2014
- The Best & Worst Performing Industries of 2013
- The 2013 Chart Of The Year
- Will 2014 Mark the Return of Market Volatility?
- A Bearish Pattern For Bitcoin?
- This Chart Nearly Disproves The Myth Surrounding Unemployment Insurance
- A Modest Proposal For The Minimum Wage Debate
- What Exactly Is Economic Growth?
- Bonds Are Hanging On For Dear Life