Dollar and stocks change it up
-Dollar surges and stocks hold their gains
-Dollar Index hits first resistance zone
-Gold hits trendline and retracement support
-Oil nears resistance from broken support
-Bonds tests very important support zone
The relationship between the Dollar and stock is changing. From March to November, there was a clear inverse relationship between the US Dollar Index ($USD) and the stock market. In fact, the inverse relationship has been in effect since September 2008, which is when Lehman collapsed. The Dollar bottomed in July 2008, a few months ahead of the Lehman collapse, but stocks did not move sharply lower until September. The US Dollar Index moved sharply higher in a flight to safety and peaked above 88 in March 2009. Stocks bottomed in March 2009 and this coincided with a peak in the Dollar. With the Dollar Index surging over 4% the last three weeks, it is significant that the S&P 500 held its gains. Given the prior inverse correlation, one would have expected weakness in the stock market.
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