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T3’s Take 3: The Mighty Mighty Dollar May Not Be So Mighty…

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1) The Mighty Mighty Dollar… or Is It?

Yesterday, the US dollar had a big rally after the Federal Reserve raised rates and hinted at a steady stream of hikes over the next couple of years.

The dollar kept rallying in the early going today, and accelerated on strong economic data.

Today’s jobless claims, NY Empire State Manufacturing Index, and Philadelphia Fed Manufacturing Index all beat expectations, bolstering the Fed’s hawkish view.

That said, the US dollar has been in a downtrend all year, so perhaps we shouldn’t get too excited just yet.

Even though the dollar rose after the release of the Fed statement yesterday, it was actually down on the day.

So we’re talking exactly 1 up day.

Traders should always be watching for changes in trend, but the dollar’s got a long way to go in proving it can really move.

The dollar’s been mighty for about 27 hours, so let’s see if it can do something bigger in the coming days.

Tomorrow, my buddy Kurt Capra’s going to give an in-depth update on the US dollar, so please watch for it!

2) Stock Action

Stocks have been stuck in the mud since last Friday’s Nasdaq-led dip.

Today’s strong economic data didn’t help since all eyes were once again on Washington.

According to the Washington Post, special counsel Mueller is now looking at whether Trump attempted to block an investigation into his ties with Russia during the campaign.

Early this morning, the VIX was up nearly 13%, and it appeared we were set to repeat  the big May 17 drop on reports that Trump allegedly asked former FBI Director Jams Comey to stop investigating former National Security Advisory Michael Flynn.

If you recall, Comey’s testimony in front of the Senate on June 8 didn’t amount to much.

The SPX fell -0.2% on the day to 2432.46 while the Nasdaq fell -0.5%.

The tech-heavy Nasdaq has been the place to be since the election, but it’s lagged for 4 of the past 5 days, which has traders thinking about 2 possible scenarios.

We have one camp saying this is run-of-the-mill profit-taking and digestion after a monumental rally.

And the other is saying that we’re seeing a true change in character, especially since so many hot momentum stocks come back down to earth.

Ever since the election, even the tiniest dips have been buyable, so until proven otherwise, the bulls have the ball.

3) Russell 1400 the Level to Watch?

This morning, my colleague Jeff Cooper laid out an in-depth argument for why the market could be headed for a real disaster.

Jeff believes that last Friday’s reversal was the real deal, and that we are set up for a major turning point in the broader averages.

He also noted that many high-flying moment names like SHOP, AAOI, and OLED have been losing traction.

According to Jeff, the Russell 2000 needs to hole the 1400 level, or we could be in for some real problems.

With the Russell closing just 10 points above that level today, it’s safe to say you should keep your eyes on 1400.

Click here to read Jeff’s report

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