Stocks are a Euro plaything. To put it nicely.

According to Clark Yingst, chief market analyst at Joseph Gunnar, the relationship between the dollar and the euro is the market tale of 2011, dominating the tape to the point that other fundamentals are being all but ignored. Yingst says the ratio is getting whipsawed by "the latest reports and rumors emanating from Europe and that's the indicator of the direction U.S. stocks are going that day".

COMMENTS:
- The Dollar break out could have legs, technically speaking. Gosh really!
- We will see significant recession in Europe North.
- China biggest export market is Europe
- Europe matters to the US (after all the US Dollar carry trade has been used to take risks in Europe)
- US Dollar will rally on USD dollars return to the USA as risky positions are closed.

If the SP500 rally is real, then:
- Why is copper and oil not following it.
- Why are new 52 week highs beating 52 week lows on the NYSE.
- Why is stock volume so weak.
- Why is 30 yr yield at 3.2% when headline inflation is at 3.9%.
- Why is the volatility index (VXN) still above 25

Short answer: FEAR!

Other posts you should see to monitor the forex and stocks battle
US Dollar Gann Angle Trend Study
Euro up, stocks up, Euro down, stocks down
Australian dollar Wyckoff 2.0 review
Richard Wyckoff Tags on the SP500

This is our view of what to do: Seven SP500 bear market trades that won

Yahoo TechTicker 20111021