The Strong Dollar Trade Is Back

A few weeks ago, I wrote a lot about the Strong Dollar Trade. This was a shift in the market characterized by a surge in the U.S. dollar, lower bond yields, lagging small caps and energy stocks and plunging gold.

The Strong Dollar Trade softened up the market for what I’ll call our brief Ebola Panic, which came as quickly as it went. But the S&P 500 hit an all-time on Friday and reached another one today. The index got as high as 2,024.46 during today’s trading, although today’s close was just a hair below Friday’s close.

But we’re still seeing much of the Strong Dollar Trade in action. Small-caps lagged today. Energy stocks are as weak as ever. Gold had a brief rally, but that’s fallen on its face. Gold is now the lowest it’s been in more than four years.

In Japan, the government announced new stimulus measures which weakened the yen even further. Note how AFLAC ($AFL) sat out Friday and Monday’s rally, despite last week’s good earnings report. Two years ago, the yen was going 80 for the dollar. Now it’s down to 140 to the dollar. That’s a stunning fall.

A few quick notes to add: CA Technologies ($CA) has rallied 14.3% since October 13. This stock drives me crazy but that’s a nice rebound. Also, shares of Bed Bath & Beyond ($BBBY) have been slowing crawling their way back. Today, BBBY closed at its highest price in nearly seven months. Lastly, I dropped JPMorgan Chase ($JPM) from this year’s Buy List. At the time, it was a tough call. Given today’s news of a criminal probe, I’m so relieved they’re no longer on the Buy List. The shares are down more than 4% for the year.

Posted by on November 3rd, 2014 at 5:44 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.