From the Desk of Ian Culley @IanCulley

The US dollar has stopped going up!

In fact, it’s already registered a slightly lower high and lower low this past month. 

But we can’t call a top in the US dollar yet. While it came close to officially triggering a top last week, the lack of follow-through kept us in our seats.

With fresh monthly candles in the books, let’s review longer-term charts and reiterate key levels for ol’ King Dollar.

From the Desk of Ian Culley @IanCulley

The dollar is dropping!

It’s finally time to bet on some sustained downside action, and the euro is my vehicle of choice.

I laid out the conditions that would flip my outlook on the euro earlier this month. Three weeks later, the pieces have fallen into place for a bullish position.

Let’s take a look.

This is still the one folks.

I've been in the camp that we're only getting bull markets in stocks around here if the Dollar is falling.

And well, a funny thing happened last month: The Dollar started falling, particularly against the most important crosses.

This happened once the journalists finally realized the Dollar had been so strong. And you know what tends to happen when they finally get the memo ;)

Take a look at the Dollar rolling over vs both the Euro and British Pounds:

I'm old enough to remember when stocks would go up for multiple weeks at a time.

They used to call those uptrends where I'm from.

So how about a 3rd straight week of gains for the Dow Jones Industrial Average?

That's something you don't see every day:

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

We discussed:

• The DJ Industrial Avg at the Pre-Covid Highs
• Fewer Stocks are making New Lows
• Small-caps, Mid-caps & Micro-caps diverging positively
• Sentiment is at a historic bearish extreme
• Credit Spreads tightening the past 4 months
• Negative Correlation Between US Dollar & Stocks intact
• Consumer Discretionary outpacing Staples
• Sector Level trends are improving
• Energy making new 52-week highs relative to Stocks
• Shorting these REITs and Software Stocks
• Industrials & Regional Banks making new 52wk relative highs
• More Bullish Options Activity in Occidental Petroleum
• Coal Stocks Setting Up For Breakouts
• Industrial Stocks ready to bounce
• Financials holding Support
• Copper/Gold ratio not confirming new highs in Yields
• 5 & 10/yr Breakevens peaked quarters ago
• Emerging Markets down near critical levels
• Seasonally the best time to buy stocks
• List of my favorite stocks to...

From the Desk of Ian Culley @IanCulley

I don’t care what your favorite TikTok financial guru says: Trading isn’t easy.

The market has made this point again and again this year.

The market has also driven home another essential truth: Trends persist.

I talk about this approach quite a bit because I’m a trend-follower. It’s my favorite Dow Theory Tenet, and it's the foundation of my approach to the markets.

Trend-following might sound simple. But it’s far from effortless. Like any worthwhile philosophy, real-world applications can sometimes be a struggle. 

In fact, no other market has tested my trend-following resolve quite like this year’s unstoppable dollar. And I’m still looking for opportunities to get long…

From the Desk of Ian Culley @IanCulley

One of the most valuable tactics I’ve learned in my career is the ability to capture a strong trend as it’s trending. 

I’m not talking about FOMO buying or blindly chasing breakouts.

In my experience, buying strong trends requires patience and discipline. 

Today, exercising these two key traits is especially necessary if you're trading the explosive US dollar. 

Navigating the latter stages of the dollar rally presents challenges, particularly in dealing with heightened volatility. However, it doesn’t mean we can’t join in on this trend responsibly as it barrels down the tracks... or, in this case, up them.

A funny thing tends to happen near the end of important trends.

The journalists finally catch on.

It's never at the beginning of trends. That's not when they get excited.

It's when everyone has finally agreed that a trend is in place, which by definition, is late in the cycle.

You see, the journalist community does an amazing job of aggregating consumer & investor sentiment. I find they are the very best at this.

Stocks have been under pressure consistently since Q1 last year. That was 20 months ago.

That's precisely when the United States Dollar stopped falling and started to rise.

And this wasn't just against the Euro, which represents 58% of the Dollar Index, we saw Dollar strength across currencies from all over the world.

The US Dollar was the only safe haven asset this year. It wasn't US Treasury Bonds, it wasn't Japanese Yen and it certainly was not Gold.

The only safe haven was the US Dollar.

From the Desk of Ian Culley @IanCulley

The US dollar has been under pressure for the past five days, and investors are dancing in the streets.    

I get it. A weaker dollar sits at the top of every stock market bull’s wish list. When the dollar goes down, stocks tend to go up. But don’t forget – betting against the dollar has only brought pain this year.

So, instead of joining the celebrations, I nailed down a clear-cut strategy for selling dollar weakness. 

Spoiler Alert: Early sell signals are already starting to fire!

From a seasonality standpoint, this is where you buy stocks.

Sentiment is near wash out levels. Who was left to sell?

Today on BNN Bloomberg I was asked about why we were buying stocks.

I think it adds some value to talk about the risk management procedures as well. And also which stocks we want to be buying.

Here's the full clip: