1. Sharp Moves Higher In The Dollar Are Spooking Stocks. Consider the year-to-date chart that tracks both PowerShares Dollar Bullish (UUP) and the S&P 500 SPDR Trust (SPY). In a 5-month period where the S&P 500 has traded in a very tight range, stocks traveled lower when the dollar spiked (e.g., January, March, May). The S&P 500’s best performance and/or least volatile movement near all-time highs came when the dollar stabilized in February and when the dollar depreciated in April through mid-May.
2. Could The Greek Drama Spread To Spain?. On Tuesday, Mohamed El-Erian voiced an opinion that a financial meltdown in Greece is becoming a “ever-increasing probability.” Yet, that’s not even the worrisome news. The left-leaning leadership in Greece that wants to avoid paying back its debt obligations has kindred spirits in Spain. Anti-austerity politicians in Spain are already promising things like wealth redistribution as well as ending home evictions. Rhetoric or reality, Spain is the next weakest link in the EU after Greece. The iShares MSCI Spain ETF (EWP) has already dropped back below a long-term 200-day trendline after starting 2015 on a strong note.
3. The Dow Transportation Average Is Sickly. Transporters of goods – shippers, truckers, railways, air – are faltering. This does not bode particularly well for the notion that industrial corporations possess vigorous demand for the goods and services that transportation companies provide. Granted, the rebound in oil from the $45 per barrel level to the $60 per barrel level may be increasing cost inputs for components of the Dow Jones Transportation Average ETF (IYT). On the other hand, the companies have not necessarily moved higher when oil has sold off. Meanwhile, technicians simply recognize the lower stock lows since December and the imminent “death cross” – the phenomenon when the 50-day moving average cross below the 200-day.
