There is some bottom fishing going on...
Adam outlined that the WSJ has a headline that could be the kiss of death for the dollar bears and the stock market bulls (click here). Specifically, it speaks to the idea that dollar swoon should continue to lead to a stock market boom.
On Friday, I spoke to the potential for the opposite dynamic in the following post (CLICK HERE).
In that post I commented: "The USD is king for the day and it may be a prelude to more dollar strength going forward.".
What would lead to that happening?
ON Friday, I spoke to the idea the dollar index had moved above its 200 hour MA. Technically, staying above that MA would be more bullish for the dollar and that in turn might also turn the beat around for stocks.
So what has happened today?
The dollar did not follow through with Friday's gains. The index moved down before rebounding.
However, what did happen was the price did bottom near the 200 hour MA today (green line in the chart above). That MA comes in at 93.327 currently (trading at 93.442).
So there was a successful re-test of the 200 hour MA and buyers came in.
The problem? The price is still below the highs from Friday and really needs to take back the 94.00 -06 level to gain some more bullish traction.
Is it possible?
Absolutely, but it will probably need some covering from the record commitment of traders shorts that Adam spoke to in his post. If the shorts start to cover, that could get the dollar bullish ball rolling again.... There is nothing like shorts covering to get a market moving higher.
We will see how the cards play out. However, if the technicals remain positive (above the 200 hour MA), and maybe you start to get some favorable news, the big short (and the jinx of the WSJ headline) could be the recipe for a reversal in the dollars fortunes (and perhaps the stock market too).
