I know…W.T.F. does the Euro have to do with the S&P 500. Alot, in fact they have traded in tandem with the U.S. Dollar trading inversely to both. Why? S&P 500 stocks are multi national who received an earnings boost when eruo dollar sales are converted into US dollars. So, what does this monthly chart of the euro tell us? October is now in the books and if you look at the October candlestick you will not that we have a topping tail or “wick”. What does that mean? It means that there are sellers above. Today alone the FXE euro trust E.T.F corrected 1.14% and is down 1.65% for he week. How has the S&P 500 performed? Down .38% on Thursday and .18%. We have managed to hold the 50 period moving average on the FXE but we know that 136.03 is serious resistance.

Why will the euro correct and the S&P 500 follow?  Perhaps its the fact that youth unemployment in the E.U. is at all time highs. Frankly I do not pretend to be that smart. However, what I am very good at is reading the charts and spotting divergences and correlations. What this chart is telling me is that the euro has begun a sell off and the S&P 500 which after a bad earnings season is extended and ripe for a pull back. I will be looking to continue building short positions
and booking profits in my long trades. We booked profits in our Facebook (FB) and Quantum Fuel Technologies (QTWW) long trades. [ Profits Quantum (QTWW) & Facebook (FB)] Our short in Tesla (TSLA) is doing well and we will be looking to lock in profits before earnings are announced on November 5th.
FXE S&P 500 correlation

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8 years ago

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