Sunday, July 3, 2016

SPX S&P 500 and USD US Dollar Index Daily Charts

The US dollar greatly impacts the stock market these days. A lower dollar drives oil, gold and other commodities higher, and their corresponding stocks and ETF's, which pumps the broad indexes higher. A higher US dollar sends stocks lower. The green lines show upward moves in the stock market as the dollar index falls and the red lines show downward moves in equities as the dollar rises.

The red box shows the Brexit collapse in stocks. The USD catapulted higher. Interestingly, note how the 'V' recovery occurs in the S&P and price has recovered all the Brexit losses (green box). However, the dollar has not dropped back down to its pre-Brexit levels. Perhaps the dollar favors upwards buoyancy. For now, both the dollar and SPX are chopping sideways.

The green circles show the death cross for the dollar which leads to stock market joy and the golden cross for the SPX which is the market joy. Note that the USD is actually higher in price than when the death cross occurred at the end of March. The SPX is a touch higher than when the golden cross occurred in late April.

The USD is bracketed by the 200-day MA resistance above at 96.51 and the 50-day MA support below at 94.60. The USD was spanked down from the 200-day over the last few days. Use this bracket as a guide. If the USD moves above 96.51, the dollar bulls win going forward and the stock market will come under pressure as commodities and commodity stocks trail lower. If the USD drops under 94.60, the dollar bears win and the stock market will continue higher to new all-time highs as commodities and commodity stocks rocket higher. Between 94.60 and 96.51 the bulls and bears fight it out. The current print on the US dollar index on Sunday evening in the States is 95.65. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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