The S&P 500 ($SPY) spent the day in a tight range, ~ 7 points. However, by the end of the day it was in the red, but not by much. The real story is in the resumed strength in the US Dollar ($UUP).
The Dollar ETF ($UUP) has spent the better part of this month the between $24.90 and $25.10 price range. That is until today when it broke through its upside resistance of $25.10 and settled tonight at $25.20. This breakout in the buck has put pressure back on the commodity markets ($CRB) sending it to the downside.
This is a relationship I have watched closely for years and has been intensely consistent. When the dollar is the strong the tendency for the U.S. Dollar to the commodity prices to trend in the opposite direction. We saw this in July of last year when the dollar started to rise and commodities started to crumble.
So where am I going with this? Well, for you bottom pickers in the commodity space, especially oil, beware. Dollar strength will hurt what was believed to be stability.
Have a great trading day!
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