I wanted to talk about something that I haven’t talked about in a while, the dollar. The correlation between the equity market and the dollar has not been correlated at all lately. I think that’s because of some deeper economic issue that I’m not qualified to talk about. One thing that I will talk about is a comparison chart of the dollar and the SPX.
Below is a comparison chart of the dollar and SPX.
Looking at the chart the market seems to be very resilient even with the dollar increasing from 74.25 to 81.25 and the market is essentially flat. I think the dollar has a lot more to run especially with all the Euro zone problems. But what does that mean for the equity market? I think more of the same, meaning more sideways action, making it a two sided market. I think the bulls and bears will have great opportunities in the coming months. Since I’m not a bull or a bear in terms of equity direction, I will be a bull and bear when it comes to IV direction and setting spreads accordingly.
Posts
No comments:
Post a Comment