No sailing… except maybe out of Dodge
So much for the possible clear sailing I noted yesterday. Big reversal today. S&P (SPY), Emerging Markets (EEM), Silver (SLV) are all sitting on trendline support after today’s big sell-off. I won’t post all of them, but here’s SPY:
Looks like time to buy? Well, before you view this as another “buy the dip” opportunity, have a look at the U.S. Dollar – or in my preferred case, the 2x short Euro (EUO):
A rising U.S. Dollar has, more often than not, resulted in falling equity prices for years now. Chris Kimble posted a great chart showing the correlation over the last three years. The trendline support has not broken yet, but with this powerful surge in the Dollar, it may be time to get out of dodge. SLW clearly failed at the dual resistance I noted yesterday. SLV traded back down to its major trendline support, but did not break it. Tomorrow will be interesting and I kind of expect a bounce, but the U.S. Dollar strength bodes poorly for equity/risk assets going forward.