DXY

The portfolio managers who diddle the markets with our hard-earned money have limited bandwidth for the mindless 'themes' that determine which groups of stocks will be in or out of fashion at a given time. At the moment, simplicity rules with this theme: dollar up, sell everything else; dollar down, buy everything else. That's the way things have been working lately -- and are likely to keep working for the foreseeable future, since the dollar's strength lies well beyond the control of the little Napoleons who run the central bank. At present, DXY is in a so-far minor correction following a run-up that culminated last week with a 20-year high at 110.79. However, if the bounce from Friday's 108.36 low impales p=109.05 in the early going on Monday and then goes on to exceed D=109.73 of the modest pattern shown, that would signal the likely resumption of the bull trend and an imminent move to new, multi-decade highs. This will be an inflation-killer, but don't expect to read about it in the mainstream media until after the global economy has been sucked into a black hole of bankruptcies and barter. ______ UPDATE (Sep 12, 9:55 p.m.): Here's a serviceable new pattern to gauge trend strength and trade this symbol, since last night's dive wiped out the point 'c' low of the original pattern. A decisive push past p=108.50 is needed to put the dollar back in bullish gear.  ______ UPDATE (Sep 13, 6:50 p.m.): The stock market's cascade today opposite a very strong dollar underscores the point I made above. Look for new highs on Wednesday after the rally impales D=110.88 of A=107.69 (6/26).

The dollar's feisty move last week past p=107.46 has all but guaranteed more upside to the D target at 110.27 over the next 5-7 days.  Don't miss an opportunity to get long 'mechanically' on an unexpected swoon to x=106.06.  The rally has also shortened the odds of a further leap to the 113.16 target of this compelling, far larger pattern on the weekly chart, one you've seen before. Although I've expected the bull market to test highs near 120 for many years, a substantial correction from 113.16 seems likely first. ______ UPDATE (Sep 8, 10:45 p.m.): DXY is correcting hard after topping a half-point above the 110.27 Hidden Pivot target noted in the original tout. Now let's see if the ''D' retracement target at 108.78 holds. It looks certain to be reached.

Groping for a bottom, the Dollar Index has already triggered one false 'buy' signal this month. A new signal would be generated by a 106.06 print, but we'll need to monitor the lesser charts if and when it gets there to determine whether the rally is for real. If so, that would imply minimum upside thereafter to at least 107.46, the midpoint Hidden Pivot resistance of the pattern shown. If the trend pushes easily past it, we could be looking at new highs by mid- to late September. _______ UPDATE (Aug 15, 8:00 p.m.): The decisive pop through 106.06 implies the rally is bound for a minimum p2=107.46.  _______ UPDATE (Aug 18, 9:41 p.m.): And now today's pop through p=107.46 strongly implies that p2=108.87 will be reached. That will of course set up a test of July 14's importnnt peak at 109.29. Keep D=110.27 in mind if and when p2 gives way.

After a scorching rally that lasted 14 months, the dollar needed a rest. It could pull back to 97.63, and that would be a mere ten percenter and presumably healthy, as I mentioned here earlier. But the long-term chart (see inset) suggests that even if the selloff were much worse -- say, to below 95 -- that would generate an appealing 'mechanical' buy at the green line. No doubt the talking heads would be proclaiming the greenback's demise. But in purely technical terms it would provide a Hidden Pivot springboard for a shot at the 113.16 target. I doubt we'll see a correction that nasty, and we'll be looking in any case for a 'mechanical' buying opportunity if and when the red line (p=100.71) is hit. In the meantime, let's focus on the lesser charts for signs of an upturn well shy of the worst-case levels identified above. That would imply minor abcd downtrends that do not reach their targets but instead reverse from p.

This correction could turn out to be be the most significant since the Covid outbreak in 2020. Higher peaks this spring diverged from lower stochastic peaks, as you can see. This is quite bearish and portends more weakness until the stochastic lines reach the oversold zone between zero and 20. There are no obvious Hidden Pivots target below, but an imaginative reading of the weekly chart suggests the dollar could grope its way down to as low as 97.63 in search of  bottom. That would represent an ostensibly healthy, 10% correction from the 109.29 high recorded a few weeks ago. It would probably be misread as the dollar's death knell, but from a technical standpoint the retracement could prepare the buck for a rally strong enough to usher in an era of deflation that seems inevitable.

DXY has blown past a 107.57 rally target today that, although not minor, is less important than the one at 113.16 shown in the chart (inset). More immediately, however, there is this Hidden Pivot resistance to contend with at 108.62. It can serve as a minimum upside projection for the near term, and although we should expect a tradeable pullback from it, the higher target at 113.16 looks nearly as likely to be reached. To keep these middling price objectives in perspective, in interviews over the last 15 years I've predicted that the dollar eventually would test highs near 120 recorded as the new Millennium began. I've also suggested thinking like a deflationist if you want to make clear sense of the economy, Fed policy, the financial system and the ruinous deflation that has become all but inevitable for the U.S. and the world. _______ UPDATE (Jul 13, 9:35 p.m.): DXY turned wildly aerobatic after rallying to within a hair (four cents) of the 108.62 target.  When the craziness subsides, expect the consolidation to give way to a renewed push toward 113.16. _______ UPDATE (Jul 24): The rally subsequently poked above 108.62, topping at 109.29, before a so-far moderate correction set in. The 113.16 target remains viable and presumably will be achieved when the pullback has run its course. Here's a current  chart.  

The dollar looks bound straightaway for the 106.49 rally target we've been using for the last month or so. I'd expected a correction down to the green line, but it was not to be.  Although my long-term forecast calls for significantly higher prices challenging peaks near 120 recorded decades ago, we should pay close attention to price action at 106.49, since this Hidden Pivot resistance looks sufficiently clear and compelling to thwart the dollar's strong ascent. I'll continue to track DXY in any event, since an increasingly strong dollar poses a grave threat to the global economy and financial system. ______ UPDATE Jul 5, 8:20 p.m.): Today's ballistic rally slightly exceeded the 106.49 target billboarded above. Given the way it speared p and p2, more upside to at least 107.57, (shown in this chart) over the near term appears all but certain. A question for the dismal scientists and pundits to ponder: How inflationary is a runaway dollar??  

The Dollar Index is working on a red-line 'mechanical' buy that was profitable the day after it triggered on June 16. The trade, which is predicated on a 106.49 rally target, is still in the black, but my hunch is that a better entry opportunity awaits when this vehicle falls to the green line, 102.80. In the meantime, although we hold no position officially, we can continue to monitor DXY closely for signs of presumably moderate weakness.

I was expecting the Dollar Index to correct down to 94, but bulls have re-asserted themselves well above those levels. Last week's powerful finishing stroke was yet another body blow for the Fed, which is desperately trying to seem in control of the financial system as the U.S. economy sinks into recession. The strong dollar will further depress the earnings of American multinationals while squeezing the air from every debtor on earth who owes dollars. A strong dollar is the last thing anyone other than OPEC wants (they get paid in dollars, which are better than gold these days, and far better than fleetingly popular rubles), but the market-driven uptrend has grown too powerful to suppress with the usual smoke-and-mirrors tactics.  From a technical standpoint, bulls appear to have clinched more upside to at least 106.49 with Friday's leap past the 103.90 midpoint pivot. We have another outstanding target at 112.14 tied to a much larger pattern.