From the desk of Steve Strazza @Sstrazza

Monday night we held our November Monthly Conference Call, which Premium Members can access and rewatch here.

In this post, we’ll do our best to summarize it by highlighting five of the most important charts and/or themes we covered, along with commentary on each

Let’s get right into it!

From the Desk of Ian Culley @IanCulley

It’s time to short the USD. 

Based on the weight of the evidence, our bias for the US dollar has flipped bearish. 

Our first shot at betting on a weaker dollar was successful, as the EUR/USD hit its target earlier in the month. That’s encouraging!

But it’s important to note most dollar pairs are running into logical levels of support or resistance.

Many of these charts are messy at best.

Except the Mexican peso.

In fact, no currency has stood its ground during the dollar's parabolic advance like MXN.

This is the video recording of the November 2022 Mid-month Conference Call.

We discussed:

• The most Bullish Time of the Year
• The most Bullish Time of the 4-year Presidential Cycle
• US Dollar vs Stocks Negative Correlation Continues
• Mexican Peso & VIX Relationship
• Euro & British Pound at Key Resistance Levels
• Stocks rallying with stronger GBP
• Fewer stocks making new lows, but waiting for expansion in new highs
• Sentiment for risk assets remains pessimistic
• What Year 3 in Bull Markets Looks Like
• Risk Management Charts: NYSE Comp & Value Line Index
• Relative Strength in SMIDs
• Energy - Still Waiting For A Breakout
• List of Strongest Energy Stocks to Buy
• What the end of the Energy run looks like - Crude Oil Key Levels
• Healthcare Stocks Continue to Lead - Which Ones to Own Now
• Insurance Stocks Lead Financials Higher - List of Buys
• Broker Dealers showing Relative Strength
• Most Important Chart on Earth: XLF & ITB
• CAT & DE are not defensive trades
...

This week we came right out of the gates with the Chart of the Decade.

The catalyst for stocks to have a sustained rally is a weaker US Dollar.

The market keeps proving that to be right.

And yes, I am aware that in the 1990s, a weaker Dollar was not the bullish catalyst for stocks.

But are you aware that this is not the 1990s?

It's 2022 and the correlation has been consistently negative between stocks and Dollars.

If you're still asking what it will take to spark a sustained rally in equities, it's only because you're not paying attention.

How is it not the US Dollar?

Find me a stronger negative correlation with equities over the past half decade or so.

Todays chart focuses more specifically on the performance of US Dollars relative to Emerging Market Currencies.

Notice how whenever the Dollar goes down, stocks absolutely love it:

From the Desk of Ian Culley @IanCulley

The dollar experienced significant volatility last week, posting its largest single-day loss since 2015.

As far as we’re concerned, the dollar is done. The weight of the evidence strongly suggests its best days are behind it. But that doesn’t mean it’s straight down from here for the US Dollar Index $DXY.

Instead, we expect plenty more volatility in the coming weeks and months. And when we look beneath the surface of the DXY, we’re at a logical level for the dollar to catch a breather.

From the Desk of Ian Culley @IanCulley

For weeks, evidence has pointed to a top in the US Dollar Index $DXY.

Sentiment, volatility, and momentum thrusts have each suggested an end to the US dollar wrecking ball.

Despite the mounting evidence, price hadn’t indicated any significant weakness in the structural trend – until yesterday!

From the desk of Steve Strazza @Sstrazza

We held our November Monthly Strategy Session Monday night. Premium Members can access and rewatch it here.

Non-members can get a quick recap of the call simply by reading this post each month.

By focusing on long-term, monthly charts, the idea is to take a step back and put things into the context of their structural trends. This is easily one of our most valuable exercises as it forces us to put aside the day-to-day noise and simply examine markets from a “big-picture” point of view.

With that as our backdrop, let’s dive right in and discuss three of the most important charts and/or themes from this month’s call.

From the Desk of Ian Culley @IanCulley

For weeks, I’ve been itching to call a top in the US Dollar Index $DXY.

Sentiment, volatility, and momentum thrusts have all suggested an end to the US dollar wrecking ball. But price hasn’t indicated any significant weakness in the structural trend.

The absence of confirming price action has made it impossible to take a bearish USD stance.

But that’s finally starting to change!