Tuesday, June 8, 2010

Dollar ETF and Index : Inverse correlation with the Stock prices.

    •    The  dollar  ETf  UUP   and    Dollar  index  always  have an  inverse  correlation   with the  broad market  stock  prices  i.e. Dollar  goes Up  ,  stock   prices  go DOWN and  vise verse.  The  above  is  a   chart        clearly  depicting the  correlation   between  Dollar ETF  UUP  and   S & P  500  ETF  SPY .
    • Let  us  analyse the  Dollar  ETF   UUP   closely

      Point  and   Figure  Analysis   of the  Dollar  INDEX :
    •  The  Dollar index  Point  and  figure chart has started  the  UPTREND  following the   blue  colored  up trendline.
    • It has    crossed   beyond  its  long standing   down trendline (colored in red)  
    • It's   currently   trading at  88  and   has  a  BULLISH PRICE  OBJECTIVE  of   115 .
    • If   dollar  continues  higher  at this  pace  (looks like it  will  ) then  all  the  commodities   like  Copper,  Metals , Coal,Crude oil  will   suffer  an  immense  downtrend   and  hence    drag  the  entire stock market down  .
    • I  do not intend  to say that   this  is  the  end of   stock  market ;  But  just  giving you all a heads  up  to  watch all   your  portfolios   which are  commodity  rich ,  like  all Oil stocks,  Agricultural  stocks, metal  stocks...etc..


    1. What is the impact of rising/falling dollar on the financial sector stocks/Bank stocks of the S&P?

      It would be interesting to see that sector's chart in relation to the dollar chart.

    2. It's a very good Q. I will analyze them detailed way in my next post .

    3. This is definitely something different n useful, way to go Vasudha!!