Fridays non-farm payroll report (+171K) was a positive report that the market originally liked. But after an hour or two the markets gave way to lower prices and finished at the days low. If the jobs report was positive, than what led to the sell off? Below is a chart of the SPY and UUP (US Dollar ETF).
The above chart shows the inverse correlation that the US Dollar has with the S&P 500. Another words, as the dollar gains strength, the S&P 500 trades lower. The US Dollar gained strength due to the positive job creation report before the markets opened and held that strength throughout the day.
The chart above is the S&P 500 trading ETF with the 200 day moving average just -3.24% below. Volume on the decline Friday was mild.
Bottom Line: Regardless what the media attributes to the market being lower on Friday, or any day for that matter, it is really very simple. Stronger dollar equals lower prices for the market as illustrated above with few non-correlation days in between. Thank you for reading.
Contact: 586-431-8000
Contact: 586-431-8000
