Saturday, January 7, 2012

The Dollar and The Stock Market

 All inverse correlations eventually fail, and a nine year trend does not necessarily mean it will continue working.

 We have been warned repeatedly that a rising US dollar is a precursor to a crash in the stock market. That would be true if inverse relationships always worked, but they don't.

 There is no law that says money cannot flow back into the US and its currency and makes its way into the stock market and the economy.

Left click on chart(s) to expand
 







 It has only been the last nine years where we've seen the dollar and the markets work their way in completely opposite directions. A rising dollar meant falling markets, a falling dollar meant rising markets.

 Foreign investors may be looking toward the US now, as a place to invest in a bottomed-out economy as their own countries begin slowing down.

 Don't discount the US. They are still the world's largest and most influential economy.














Always perform your own due diligence. These are only my opinions.