Dollar Is The New VIX Real Time Saying Lower S&P 500

| About: PowerShares DB (UUP)

Summary

I don't know how quickly I can write.

But this looks like it's setting up.

Either way we said yesterday that the dollar is the new VIX to tell you where we're going.

(Picture: Needed a fast picture that had something mildly to do with what I'm writing about.)

I'm trying to write fast as a follow up to an article that I give myself credit for from yesterday. Not that I was correct (in fact SPY went up since then) but it wasn't intended to be a short term call. It was a report to point out a nifty tool I think I found in a relationship to guide us in these post Brexit markets. It didn't tell us anything at the time but it looks like it may tell us something today.

Here's the chart and this is one of my favorite patterns (You know I'm typing fast if I say I, "I").

This is what I call a trend with a flat bottom (It can go the other way too). That means it will likely test that bottom a few times and then break down through it.

That means the euro is not as strong as it looks today. We think that this is a sign of a market showing their cards.

If we are right about this formation it means the dollar is going to go up, this chart down, and that is a sign of nervousness.

We expect that to coincide with S&P 500 direction. To be clear, we think that means lower.

Again, we think the euro (NYSEARCA:FXE) versus the dollar (NYSEARCA:UUP) is going to tell you a lot over the next few weeks about clues to market direction.

We wanted to follow up on yesterday's note to show you real time what we think.

We'll all hold hands and see how it plays out together.

This may sound like a shorter term note but really it's here to show you a relationship that we think will tell you a lot in the days and weeks to come.

Conclusion

We're still bearish.

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