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Technology Stocks : Semi Equipment Analysis
SOXX 316.33+1.3%Dec 10 4:00 PM EST
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To: Return to Sender who wrote (45738)11/1/2009 8:50:06 PM
From: Sam  Read Replies (2) of 95563
 
Meanwhile as we have seen the past few years the action in the US Dollar (USD) has had a substantial affect on the market. Generally when the USD has rallied (points E to F) the S&P 500 has fallen (points G to H) and when the USD has fallen (points F to E) the S&P 500 has rallied (points H to G). For the past several months the USD has been in a downtrend however this week it rose above its longer term downward trend line (yellow line). The key to future action in the market may depend on what the USD does over the next several months. If the USD begins to rally strongly and reverse its previous downward trend then this would likely be bearish for the major averages.

It is obvious looking at the charts that there has been an inverse correlation between the dollar and the market. I know I asked this a few weeks ago, but I'm not sure we ever pinned down why the inverse correlation has held. While I haven't actually looked, I doubt it held in earlier periods. For example, it seems to me that the dollar strengthened in the late 90s, along with the market. But of course my memory may be playing tricks on me.

Anyone have ideas about this?

EDIT: Just read this in Briefing's recap:
A weak dollar benefits the economy as it boosts exports, and investors are trading stocks based on the moves in the currency.

I'm not sure that accounts for all of it, but it is likely one aspect.
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