The long-term US Dollar chart above is rather self explanatory. Over the last few weeks the USD took out some very important support levels at around $94 and $92. We wrote about it in our subscription service.
What does that mean?
Well, technical analysis suggests the USD will re-test prior long-term resistance (upper red line) before resuming its uptrend or bouncing higher. That line is sitting today at around $82. Suggesting the USD might fall another 10% before hitting any sort of a support. Plus, we all know President Trump hates the Dollar and wants it lower.
Why is that important?
Well, many investors would argue that lower Dollar leads to higher earnings for multinationals. And higher earnings, of course, lead to higher stock prices. At the same time, the bears would argue that stocks cannot go much higher because valuations are already stretched to their absolute max. No matter what the earnings do.
Now, to chart number two.
Original source Fed to take historic leap into the unknown
The Federal Reserve is set to take a leap into the unknown next week by beginning to sell some of the roughly $3.7 trillion of bonds and mortgage securities it amassed during the financial crisis.
Unprecedented. Historic. Has never been done before. Borderline criminal.
It is no secret that coordinated worldwide FED buying of stocks, bonds and who knows what else is the only reason we find ourselves in today’s predicament. What predicament? Massive valuation bubbles in nearly all asset classes.
The question becomes, if the central bankers are the buyer of last resort, and have been for close to 8 years, if they begin to sell, who will buy?
The answer is……NO ONE with a brain.
So, the USD is telling us that the stock market might surge higher based on lower dollar and higher earnings. Yet, Janet Yellen is suggesting that the FED is about to dump a whole lot of overvalued paper on the market. Leading to what could be a massive sell-off.
So, which one of these two distinctly different outcome will fire off???
That is exactly what we discuss here based on our mathematical and timing work. Please Click Here to learn more.