Dollar index broke out of a descending channel (like it Did when stocks fell for 3 of 4 weeks in the fall. This on the back of record margin debt and leverage as well as call options . Seems we are gonna dip for a period , a Successful back test of the 90.73 level on dollar index Would increase confidence That a stock market trading about 3-4 standard deviations away from it normal sentiment will get rid of some “froth” and there is plenty . These things are never sure things..but a dollar rally is a good way to cause a sell off.
When the dollar breaks up, equities have a strong correlation of going down. We can see this also occurred after first week in September for a couple weeks
Anyway , unless Biden et all put a big stimulus together fast , seems the dollar will give stocks a pause at a time when seasonality is short term bearish *and this will likely set up a nice buying opportunity At lower levels ..as its likely the dollar will resume its decline after And keep stocks moving up . Unless Joe has much more resistance in congress popping up to the new stimulus plan that has effectively been priced into market . Again just a bit more of a hunch but given the nose bleed valuations it's worth watching this short term dollar rally.