I’m sure you’ve noticed concerns over a reacceleration of inflation, historic housing pullbacks and overall financial conditions shaking up the markets. Several news events remain this week to shed more light on all the factors, so caution is warranted.
The bottom line of what we’re seeing is a response to the economy with all of its very large pieces and parts.
The problem is that studying it all is daunting for most traders, and it takes us away from our main focus: making money.
To help you quickly ascertain market direction and economic responses, here’s a bare-bones tip to keep in mind…
The U.S. dollar, as shown on this Barchart of $DXY, provides a smooth summary of reactions to the whole economic enchilada.
Currently, a return up to the 200-day moving average at $106.46 is a notable target. What will be most interesting to me is the reaction to this resistance area, especially given that support at the 50-day moving average is not too far below.
Be informed as you anticipate future price action.
Take a further step back and note how beautifully $DXY used the 50-day as support from March 2022 until mid-October.
Around that time in October, the S&P 500 began a nice run up from a bear market bottom. But right now…
The S&P 500 is at a crossroads.
A few weeks ago, the 200- and 50-day lines crossed. And they’re about to be retested in multiple ways, as you can see in the green circle on the chart.
It’s worth noting that the green trend lines drawn have also converged at the crossroads.
Where do you think the market will move after the crossroads are encountered? Well, the answer is worth like a million bucks.
Use a process like this to help you make sense of the economy, and in turn make more cents. I know you can!
It takes a dollar to make a dollar.
One simple way to play this activity and keep your head in the economic activity at the same time is with the Invesco DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP). The options are thin, but the ETF is cheap, currently around $28 a share.
Think and win!
Celeste Lindman
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