The Most Bullish Catalyst For Stocks

JC Parets
February 2, 2022

Last night went a little longer than I intended but I think it was necessary.

We had a lot to discuss. I hope you found that helpful.

Premium Members can watch the replay of our Live Video Call and download the slides here.

But this is what's on my mind: Is this US Dollar unwind just getting going? 

Is there anything more bullish for risk assets than the US Dollar falling apart?

Let's review what's happening here. Prices of the US Dollar Index failed to hold its breakout last week. Momentum confirmed a Bearish Divergence. And Commercial Hedgers have on their most aggressive net short positions since late 2016.

Do you remember what happened in late 2016? The US Dollar started its collapse and 2017 turned into one of the best years in the history of the US Stock Market.

Do you remember what happened next? In early 2018, the Dollar bottomed and stocks began their struggle all over the world. It wasn't until the US Dollar finally peaked in March 2020, that stocks ripped from there.

More recently, since last Spring it's been relentless Dollar strength, and that's coincided with a tough tape for many investors.

So if Commercial Hedgers are right, as they tend to be near extremes, and the Dollar sells off, is there anything more bullish for stocks and other risk assets?

My feelings are: No.

The bottom line is this, if the US Dollar Index is below its November peak, we need to be buying risk assets, stocks in particular.

We went over all of this and which names we want to own on last night's call. You can find that replay and slides here.

Ping Peter or give us a call if you have any questions on accessing the Video and Trades from last night: (323) 421-7991

JC

 

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