Today was the first day where investors really worried about the strength of dollar. They should be worried. I have explained in past the relationship of dollar strength and market corrections. Last week, I was so impatient with the way market behaved. It wasn't making any sense.
Look at the following chart of US dollar. The position it has acquired right now is very scary. Scary in the sense that it is on the verge of breaking out. Breakout essentially means that everybody has to buy the dollar. It will strength with just a thought wave. It will send shock waves in market directions. Well, I am kind of sure that market will only correct and not crash. The cause of crash is missing.
Technically Dollar has resistance 78.75 So hopefully it will reverse from here. But a break above this level will let it raise freely. That does mean the correction in all commodities and stocks has to occur. This is required to adjust the value of assets in dollar terms. Asset rise in price if dollar weakens and Asset price reduces if dollar strengthens. The reason I am pointing this to you, is to make you aware of what happened suddenly that is influencing the market.
Make sure the stocks you have stay above 150 day moving average line. That should be your fear point. If stock closes below 150 day line then it is bad sign and needs caution from you. Currently I believe the stocks will correct until 150 day line and hold that support.
Thanks
Anil
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