King Dollar, or Not?

January 19, 2024

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Table of Contents

Summary

  • We got the consolidation/pullback in the US indexes as well as the expected bounce (in progress);

  • What now? Nothing has changed much since yesterday;

  • I expect still higher into the 2nd part of next week, perhaps after a minor consolidation.

  • We will see if there will be more info for a more detailed update in the weekend report.

DXY and Inter-Sector Impact

  • In Late December, and again in early January, we called for USD (DXY) strength and a weakness in bonds, crypto, gold, and the stock market in the first couple of months of 2024;

  • So far, that started to happen, except the stock market, after a brief pullback, is again flirting with the last high (but my expectation is that in several days it will rollover);

  • What now? Figure 1 shows that DXY reached the nominal 40D cycle target (green box);

  • Although it could still push higher into the target box, normally, it is “allowed” to retreat now, based on my analysis, into late January, before continuing higher into Spring’24, with a potentially negative impact on the sectors mentioned above;

  • We will do a timely update as needed.

Figure 1 – DXY N40D cycle target reached.

Dogs of Wall Street

  • Some of the biggest disappointments for many are the lack of recoveries in SoftBank and ARKK despite the strong NDX performance (significantly driven by Magnificent 7);

  • Is this telling us about what might be coming?

  • I do not think so; it is likely just a consequence of holding many failed IPOs and some underperforming technology stocks (bad stock selection);

  • Figure 2 shows the chart of ARKK (SFTBY has a similar wave structure);

  • The bounce in 2023 is a 3-wave corrective structure, the wave 4 in EWT terminology, with wave 5 down to below Dec’22 low coming;

  • I will look at ARKK’s cycles in the premium section.

Figure 2 – Daily chart of ARKK.

Buzz On the Street

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