When we wrote “Inflating a Bull Market,” we mentioned the inverse relationship between the US dollar and stock prices. In March, the US dollar peaked from overbought levels and began to decline. At the same time stocks bottomed from oversold levels and began to move up. The reason is simple – Stocks are priced in US dollars. As the dollar weakens, it takes more of them to buy stocks (or anything priced in Dollars), which causes prices to rise.
The US Dollar is now oversold and may be poised for a move-up (at least in the shorter term) which should cause the price of “things” priced in dollar to decline (Stocks, Bonds, Commodities, etc) (more)
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