Two things I will be watching heading into this week is the action in Copper and the Almighty Dollar.
It’s make or break time for the dollar, $DXY. On strength, we could see a breakout in the currency, which should lead to lower stock prices. However, should the dollar back off here, we could see equities bounce back.
I’ve also been watching this breakdown in Copper, /HG.
I want to see copper bounce back strong, and the dollar back off a bit here. That would give me interest in buying a few things here. Should copper continue to slide, I’m perfectly fine sitting on the sidelines.
My watchlist will be up in a bit, still going through a few scans.
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How’s the knee?
still out of commission.
Higher dollar does not necessarily mean lower stock prices, as we’ve seen in the last few months. That correlation is gone in my opinion.
You have to ask yourself – what causes the correlation? Higher dollar driven by risk-off sentiment, weak global growth, and lower commodity prices or Higher dollar driven by strong US economic growth and fear of interest rate hikes.
Higher dollar in both cases, but one likely leads to lower stock prices while the other can support higher prices.
Which situation do you think we are confronting now?
Yep .. correlation is not always valid, but it often is. I made a bet Friday that it goes lower soon. Not liking the futures action at the moment.