8 Minute Read

Tackle Today: The Dollar Finally Dropped

June 2, 2023

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«Gold stocks and foreign equities rejoiced.»

Traders,

Coach Tyler, here. Today we could talk about mega-cap stocks rallying yesterday. We could also point to the continued dominance of technology, semiconductors, and the AI sentiment wave. The S&P 500 officially notching its highest daily close since last August probably deserves some commentary too. But it’s the U.S. dollar’s steep uptrend finally breaking that stole the show for me.

For the past month, the greenback (UUP) and the 10-year yield (TNX) have been marching consistently higher. The surge kept a lid on foreign stocks (EFA) and emerging markets (EEM) while outright toppling gold stocks (GDX). It’s been painful.  Fortunately, the steepness of the dollar’s ascent was unsustainable.

As it turns out, Thursday was the day it finally ended.

UUP ended down 1.19% on heavy volume, slicing through the trendline that characterized its ascent. GDX, EFA, EEM, and even basic materials (XLB) took note and finally scored much-needed oversold bounces.

Make no mistake, the turnabout in these areas came thanks to the dollar reversal. It’s about time. More, please.


Chart of the Day: UUP

UUP finally cracked its trendline, and a wave of selling ensued. You can ignore the monster wick, as it was a data error. Even without it, that was a sizeable red bar.



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