• 654 days Will The ECB Continue To Hike Rates?
  • 655 days Forbes: Aramco Remains Largest Company In The Middle East
  • 656 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,056 days Could Crypto Overtake Traditional Investment?
  • 1,061 days Americans Still Quitting Jobs At Record Pace
  • 1,063 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,066 days Is The Dollar Too Strong?
  • 1,066 days Big Tech Disappoints Investors on Earnings Calls
  • 1,067 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,069 days China Is Quietly Trying To Distance Itself From Russia
  • 1,069 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,073 days Crypto Investors Won Big In 2021
  • 1,073 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,074 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,076 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,077 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,080 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,081 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,081 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,083 days Are NFTs About To Take Over Gaming?
What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

  1. Home
  2. Markets
  3. Other

SPY v. UDN

Figure 1 is a daily chart of the S&P Depository Receipts ETF (symbol: SPY) in the upper panel versus the PowerShares DB US Dollar Bear ETF (symbol: UDN) in the lower panel.

Figure 1. SPY v. UDN/ daily
SPY v. UDN/ daily

UDN moves inverse to the direction of the Dollar Index. Therefore, UDN will move with equities, which seem to only benefit when the currency is falling. Got it? As can be seen in the chart, both SPY and UDN are trading at the upper end of their respective trend channels. With the Dollar quite oversold and nearing past support levels, a bounce is likely. Will stocks decouple from their highly negative correlation with the Dollar Index and start to move higher on their own merit? No doubt the talk of QE2 and the Fed's willingness to go "all in" at the expense of the Dollar has fueled the recent run up in equities. However, it is my contention that the Fed is "pushing on a string". Further stimulus is becoming less and less effective, and at some point (maybe even now), the rise in equity prices is only nominal. In terms of real purchasing power, stocks will lose in the long term.

 

Back to homepage

Leave a comment

Leave a comment