Outside of the last decade “rallies in equities usually occurred hand in hand with a run higher in the dollar,” the firm’s strategists added. “So while continued divergence between the S&P 500 and small caps and transports would be a negative if it continues, we would view the strength in the dollar as a positive for equities.”
SPDR S&P 500
PowerShares US Dollar Index Bullish
Full disclosure: Tom Lydon’s clients own SPY.