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Potential Dollar Rally Spooks Stocks

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Banks and tech among the losers on the day.

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It got pretty ugly out there today, or downright spooky (lame Halloween joke).

The S&P 500 got whacked today by -2.82% to 1036 finishing right at the low for the day, and the low for the week.

It was an across the board ugly sell off but some losers that stood out for the day were the financials: Bank of America (BAC) -7.31%, JPMorgan (JPM) -5.84%, and Goldman Sachs (GS) -4.71%. Tech was very weak as well: Apple (AAPL) -4.00%, Google (GOOG) -2.71%, and Amazon (AMZN) -3.07%.

These names aside, the biggest culprit today was the dollar as the green back rallied 0.73% against the Euro today. Professor Branden Rife filled Buzz readers in with his dollar thoughts.

Please keep an eye on EURUSD. Not just because it is by far the biggest weighting in the DXY, but because it is testing its uptrend dating back to March (again).

The double bottom in DXY that was setting up early this month did not materialize, however it seemingly broke its downtrend line on Monday. My weekly work has been choppy but still positive since late last month, and as of today, my monthly turned positive as well. That being said, we really need to see EURUSD break its uptrend to confirm the aggregate shift in dollar trend.


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If DXY can hold above 75.80 and EURUSD breaks below 146.50, things could start getting interesting for it on the upside.


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Side Note: Can you think of a more crowded trade right now than being short dollar (for the carry or otherwise)?


We began the week talking about the change in tone of the market, the dollar rally certainly suggest something is afoot. Today on the Buzz and Banter, Professor Depew gave his thoughts on the S&P 500.

We're finally arrived at the point where the bullish percent indicators are suggesting supply has overtaken demand, and today sets up an important day via DeMark indicators as well. Looking at SPZ9, a close below 1050.05 would set up potential qualification of TD Propulsion Momentum Down. What would then be needed is a lower open Monday and at least one tick below the open to qualify that level. The Propulsion Down Exhaustion level is 1001.60. As well, the TDST Down level is nearby at 1046.50 This would potentially be qualified as well if the open restriction is met on Monday.

This would be the first break of a TDST Down level since the rally began in March.

The close should be interesting because the TD Range Projections are suggesting the close will be within the range of 1050.10 to 1075.50 since the tolerance level high (1061.04) and tolerance level low (1055.96) have both been exceeded. Obviously, if the range projected close is correct we will not get a potential qualification of those breaks.


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Hope everyone has a Happy Halloween!


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Position in BAC

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