US Dollar Breaks Out, GLD, SLV, JJC, USO, SPY Down, Market Analysis Part 1

Market Analysis for 3/24/2010 (Part 1: DXY, GLD, SLV, JJC, USO, SPY)

I'm going to chart out a bunch of stuff and chop up posts into parts.  Institutions have been minting Dollars on the Dollar rally since December, 2009.  Click here for an index of previous posts/charts/large spec action on the US Dollar.  The US Dollar Index broke out yet again folks.  Since gold peaked in the beginning of December, 2009, DXY (US Dollar Index) is up 10%.  Remember that Forex brokers offer leverage up to 400:1 on currency pairs in some cases.  So 10% is like a million percent people!  Look at the correlations between DXY, GLD (gold etf), SLV (silver etf), JJC (copper etf), USO (oil etf) and SPY (S&P etf) since GLD peaked.  The US Dollar outperformed everyone...

Copper almost took it out but couldn't handle the Dollar's strength.  The S&P ETF came in second place so it seems like action is concentrated in the United States.  During the past few years the US Dollar had an inverse correlation with the market and now that is not the case.  Investors fleeing the Euro, anticipation of higher interest rates, US growth or perhaps an invisible m&a bid could be fueling interest in the US Dollar and equities.  That's just a thought out guess, I'd like to hear other conclusions.

It will be interesting to see if commodities react lower from here based on the fact that the paper they're priced in is moving up in value.  Also, if foreign S&P earnings are debased overseas when converted into Dollars, shouldn't that put pressure on S&P EPS (SPY)?  If the S&P reverses abruptly and breaks through that 1150 floor that could put a double dip recession in play (imo).

Chart courtesy of

In the beginning of March you can see there was a US Dollar correction and commodity rally.  Since then commodity ETFs started rolling over right before the US Dollar broke out.  Here it is closer.  This is just comparable backward looking action.  I want to zoom out and do technical analysis on 1-year charts to scout out longer term potential set ups, which I'll do tomorrow. 

DXY vs. GLD, SLV, JJC, SPY, USO (since mid March)
Chart courtesy of