Home > stock charts, Stock Market, technical analysis > Disturbing: SPY / GLD

Disturbing: SPY / GLD

Want to be disturbed?  In case you weren’t sure if the last 5 years of positive market action is really just a function of U.S. Dollar weakness  (’08 crash as an irrelevent aside for our purposes)… um… it is.

The S&P has rallied for the last 3 years.  But really, since 2006, strength in the U.S. equity markets has largely been a function of dollar weakness.  Below is a chart of the S&P 500 (SPY) measured in gold (GLD), which allows us to take into account appreciation/depreciation of U.S. Dollars.  I prefer to use gold as my Dollar proxy, since UUP and Dollar indexes are measured against other Fiat currencies and wouldn’t take into account any universal strengthening/weakening of Fiat currencies as a whole.  Below is a 20 year chart of the S&P as measured in gold.

Then the more familiar S&P chart over the last 20 years, as measured in U.S. Dollars:

Quite a different picture, eh?

Next up – SPY vs. Fed Balance Sheet.  I’m pretty the correlation is striking.

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