GZ, This was posted on another board a while back. If correct, it could mean that a sell in the dollar is a buy in the SPX.
"Here's a nice correlation. USD highs correspond with SPX lows, and USD lows correspond with SPX highs:
stockcharts.com[e,a]waclyyay[d20020101,20051219][pb50!b200!d20,2....
March 2003 USD pivot high, SPX low.
June 2003 USD pivot low, SPX high
August 2003 USD pivot high, SPX low
Jan 2004 USD pivot low, SPX high
May 2004 USD pivot high, SPX low
May-October, essentially a flat move for both
End of Dec. 2004, USD pivot low, SPX high
End of March/early April 2005 USD pivot high at 86.50? SPX low?
If the USD turns down from 85.50-86.50, the target should be 78.50 for a low.
The moves in the USD almost mirror the moves in the SPX in percentage terms since early 2003. If this continues, a move down to 78.50 on the USD from 85.50 would yield 1260 SPX.
Essentially I'm suggesting a multi-year low at 78.50 on the USD should yield a macro high on the SPX.
It's also interesting that foreign investors have essentially broken even on the SPX since the March 2003 lows.
I do not know what other implications this relationship has, but it's very intriguing to say the least.
Basically, if you're bullish on the USD, you're going to be bearish on the SPX whether you like it or not, and vice-versa." |
