Cool Technical Charts of the S&P, The Dollar, and Intermarket Relationships

Cool Technical Charts of the S&P, The Dollar, and Intermarket Relationships

I was listening to Jim Puplava’s Financial Sense Newshour this morning while cooking breakfast – it’s one of my “old man” traditions, there’s nothing better than cooking up an omelet while getting a technical rundown of the financial markets!

As usual, his technical analyst guest was fantastic.  This week it’s Ronald Griess, founder of The Chart Store, who put together some very interesting charts of some negative divergences that are showing up in the S&P 500 and the MACD – the last time two times we saw this, the market crashed each time.  You can check out the charts here.

Griess also mentions something we’ve been speaking about for some time – that the US Dollar appears to be the driving force in the financial markets.  It’s dollar up, everything else down – or dollar down, everything up.

To illustrate this point, he pulls up a table of how various financial assets have performed as the dollar has waxed and waned:

The following table shows the two major upswings and the two major downswings of the U.S. Dollar Index since March, 2008. The Table includes the percentage changes for other asset classes as well. When the DX goes up, other assets seem to go down. The reverse has also been the case.

He concludes with an excellent point – that you don’t need to figure out a bunch of markets to trade today.  You only need to figure out one – and that’s the dollar.  If you can accurately anticipate which way the dollar is heading, you should be able to make some successful trades.

And the link to Puplava’s audio interview with Griess is here.