Dollar Strength Seen in Stocks 1st Since Lehman Died

The dollar is rallying in tandem with stocks and commodities for the first time since before Lehman Brothers Holdings Inc.’s bankruptcy last year sparked the financial crisis, signaling the worst may be over for the greenback.

We are witnessing a watershed shift in sentiment regarding the dollar.

The forex market will anticipate the Fed tightening and price it into the dollar, leading the dollar to rally.

Spin will always attempt to cloud reality by manipulating perceptions.

• Nothing suggests that the inverse relationship between stocks and the dollar since 2001 has been terminated. (See UDX vs S&P 500)


• While the dollar has rallied above its the 50-day moving average (often cited as an indication of a sentiment shift), it has done so numerous times since 2001. Every move above ended when the weak-hands buying into strength were exhausted by commercial selling. This is happening again right now. (See U.S. Dollar Index COT Money Flows)


• Probably the most important piece of information is that "time" for a dollar rally is still wrong. Primary down legs in the dollar have averaged 132 weeks since 2001. The current down leg is only 43 weeks old. (See U.S. Dollar Index COT Money Flows)

U.S. Dollar (USDX) vs S&P 500:

U.S. Dollar Index COT Money Flows:

Source: http://www.bloomberg.com/apps/news?pid=20601087&sid=aDJI6N0ZxjxI