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A CHANGING RELATIONSHIP: THE SPX, THE FAX AND THE DOLLAR (DXY)

|Includes:FAX, SPDR S&P 500 Trust ETF (SPY)
Here are three charts: DXY, FAX and SPX. These charts are traditionally related. The FAX and the DXY are inversely related. The SPX and the DXY for some time, have been inversely related. So, if the FAX, the First Australian Prime fund goes up the DXY will be going down. If the DXY rallies, a proxy for the dollar, the SPX, the S&P 500, should be going down. This is the relationship, which has been in place for several years. The inverse relationship between the DXY/FAX can be tracked for many years and has been a much better way to track up and down trends in the US dollar.
 
DXY over 6 months
As you can see the DXY has had a sharp rally since Dec.
FAX over 6 months
However the FAX, since Dec. is flat-lined and does not appear to be inversely mirroring the DXY
 
 
 
 
 
 
 
 
 
 
SPX over 6 months
The SPX, which should have sold off sharply since Dec, if you expected it to follow a traditional relationship to the DXY, is no longer tracking every fluctuation of the DXY and is looking a little more like the FAX.
 
Six months is a good period in which to filter out trash. And this relationship between the dollar and the SPX is showing signs of a real shift. This shift is confirmed by the FAX which is an Australian bond fund removed from US stock market fluctuations. The MACD compared over this same period in each index, is also behaving differently. The DXY is overbought and the SPX and FAX are rising from oversold. 
 
Looking at this emerging change, I could conclude that the dollar is heading into period of weakness and the FAX and SPX will both do well in the weeks to come. In particular the MACD on the FAX looks very promising and spells trouble for the dollar and a possible rally in US equities.


Disclosure: none
Stocks: SPY, FAX