Our US dollar Advance-Decline line just closed at 21-year highs.
Here’s the chart:
(right-click and open image in new tab to zoom in)
Let's break down what it shows:
The blue line in the top panel shows the price of the US dollar index.
The black line in the bottom panel represents the US dollar Advance-Decline line, which is comprised of 23 key currency pairs.
The Takeaway: The US dollar has been ripping higher over the past month, and when we look beneath the surface, we see healthy breadth readings and confirmation of strength as our US dollar Advance-Decline line has reached its highest level in 21 years.
Typically, a strengthening US dollar would indicate that risk assets like stocks are facing challenges, given the broad intermarket implications of the US dollar.
However, it appears that stock market bulls remain unfazed by the strengthening dollar. Perhaps a weaker dollar isn't essential for stocks to continue their rally - at least for now.
Does this suggest a warning for risk assets?
Should we be concerned about it, or is it something to overlook?
