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Re: DiscoverGold post# 70054

Friday, 10/14/2016 9:59:32 AM

Friday, October 14, 2016 9:59:32 AM

Post# of 76351
Can The S&P 500 Continue Rising Alongside The U.S. Dollar?

* October 14, 2016

Conventional wisdom dictates that the stock market needs a depreciating currency in order to advance, especially given the foreign exposure of S&P 500 constituents.

Empirical evidence, however, clearly shows that all U.S. dollar bull markets (including the current one that started in 2011) have been positively correlated with equities (please see Chart).

Deciphering this positive stock/currency correlation during dollar bull markets is instructive. A virtuous cycle develops when the dollar and stocks feed off of each other as foreign flows bid the U.S. dollar higher and consequently U.S. dollar denominated assets (including equities) also benefit from these flows.

The primary reason for the attraction of foreign flows onto U.S. shores is diverging interest rates. Historically, the U.S. dollar firms when U.S. interest rates reside in the upper half of the G10 interest rate distribution.



http://blog.bcaresearch.com/can-the-sp-500-continue-rising-alongside-the-u-s-dollar

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Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
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