Business Magazine

Thursday Thrust – Do We Have Enough Fuel To Fight Dollar Gravity?

Posted on the 31 May 2012 by Phil's Stock World @philstockworld

That's how much the Dollar has risen in the month of May.  Should we be surprised then, that the S&P has fallen 7.2% – from 1,415 to 1,313?  The Dow is down 900 points and that's 6.7% etc.  Are the chart's, in fact, giving us a misleading view of how well our markets are doing?  I said to Members in this morning's chat:

 

Big Chart still indicating a constructive floor although it doesn't feel like it.  Don't forget we're supposed to adjust our lines vs the Dollar and the Dollar is up 5.4% in May.  This is a BIG factor because it means ALL stocks should be 5.4% cheaper when you buy them with Dollars so look 2 2.5% lines higher and THAT's where we've recovered to – back to our April highs in a Dollar-neutral market.  

Will the Dollar go up forever and keep shoving the indexes lower?  Probably not and, if the Euro ever comes back and the Dollar falls – we will see a spectacular rally and all the bears will whine about how unfair it is ect. but I'll tell you right now it's a very simple and natural thing for us to have a sudden 2.5-5% pop on any can-kicking resolution from Europe and/or stimulus from the Fed.  

It's very impressive that we've made any progress at all since the 21st as the Dollar has moved 2.4% since then (81-83) and that also means gold is holding up pretty well and gasoline is a huge rip-off as well as, of course TLT is up to 126.16 because the Dollars the notes are priced in are rising and that's part of your net gains in TBills too.  

Back in the last Euro panic in 2010, when the Euro dropped to $1.19, 



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