DXY
strength creates stock market bottoms as earnings translation reduces earnings from overseas.
This simple graph will show you very simply how the
DXY
creates strong changes in earnings estimates, which in turn, cause market participants to change the value that they are placing on the market.
Combine
DXY
movement together with other indicators like
VIX
and
PC
put/call ratios and
SKEW
to find times when the market has already factored in the movement of the $DXY.
The
DXY
is now sideways for 1 year, but has had a few waves of gains which have created downdrafts in the overall stock market.
See if you can do the analysis going back further to see other times the
DXY
impacted the
SPY
,
DJI
, $QQQ.