Stocks Open Weak On Dollar Strength

The inverse correlation between the dollar and stocks is pretty amazing. You can cite the economic data that came out this morning if you want, but the first thing I noticed was the the dollar as up, and so stocks were down. As I said, this relationship can last for awhile, but I doubt we can enjoy a sustainable bull market on the back of a weak dollar.

As for that economic data, October Consumer Confidence came in at 50.2, up from 48.5 last month. In housing, the CaseShiller index for August came in at 148.6, which was slightly weaker than the prior month's reading of 148.9. But year/year, the 20-city price composite rose +1.7%.

There was also another round of solid earnings reports last night, but most of the stocks are lower today. US Steel (X), Amgen (AMGN), and Texas Instruments (TXN) are all lower, while Coach (COH) reported great earnings and its stock is flying +10%.

Asian markets were mostly lower overnight, as was Europe this morning. This despite the UK posted stronger than expected GDP growth, and having their sovereign credit rating affirmed by Standard & Poor's.

The dollar rally is weighing on commodities a bit, with oil and gold trading down fractionally to $82.50 and $1337, respectively.

The chart below shows the 10-year yield, which is bouncing above its 50-day average for the first time in several months. It's hard to believe a new uptrend is at hand, given that the Fed is likely to announced new QE measures next month, but it's interesting nonetheless.

Trading comment: Boy, this market sure doesn't go down easily. Must be very frustrating for the bears. As I am finishing this post, the Nazz is already back in the green while the SPX is just about to go positive. Stay the course.

long COH