The Currency That Might Rescue the Nasdaq

We’re in uncharted territory. [Jeff Clark's Market Minute]( The Currency That Might Rescue the Nasdaq By Eoin Treacy, co-editor, Market Minute What does the international currency market have to do with tech stocks? First, let me explain how the market works… All currencies are ratios. If one goes up, the other goes down. In the international market, currencies are paired against each other to judge their value. For example, the Chinese renminbi appreciated against the dollar when the pandemic began. Naturally, this led investors to believe China was doing a better job of containing the coronavirus than the U.S. The same thing happened to the euro and yen… Both currencies appreciated against the dollar. Those countries must be doing a better job of tackling the pandemic than the U.S., right? Recommended Link [21 Years Later…The Event That Minted Millionaires Is Back!]( What you do with your money in the next few weeks could set the tone for the rest of the year. And here’s why… [image]( In 1999, tech stocks went parabolic when they entered the last phase of the boom. That’s when fortunes were made… All in a matter of months. Legendary stock picker Teeka Tiwari believes it’s happening again. And experts are projecting [this tech play will jump as high as 615% by the end of the year](. [Click here for the full story.]( -- Not so fast… In the last few months, perceptions have changed. The U.S. is now close to the top of the leaderboard for vaccinations. Meanwhile, the Europeans have badly fumbled the acquisition of vaccines. They're way behind the curve in treating the virus. This puts Europe close to the bottom of that leaderboard. In China, the renminbi is now weakening. China has a population of 1.3 billion people they need to vaccinate. That will take time. And, they can’t open their borders until it’s done. On top of that, last week, the Chinese central bank announced that it’s beginning to remove stimulus. They’re worried about excesses in the financial sector. So, the market is voting with its feet. Investors are pulling their money out of China. Most of them think it’s a mistake withdrawing stimulus too early. They believe removing support will hurt growth. That money has to find a home somewhere. It’s flowing back into the dollar because the U.S. is expected to quickly rebound this year. Ultimately, we’re in uncharted territory right now… The international market has never dealt with a pandemic before. So, trading currencies based on their ability to distribute the COVID-19 vaccine is a new phenomenon. However, because of our country’s response to curbing the virus, the dollar is showing increasing signs that it’s bottoming against the euro and the renminbi. And there’s only one direction to go from the bottom… Up. [Available Now: New Retirement Blueprint from America’s Most Trusted Options Trader]( Where Does the Bond Market Factor in? When the dollar appreciates, U.S. assets become attractive to foreign investors. That’s positive for the bond markets since the two markets are correlated. If the dollar keeps appreciating, more institutional investors will buy Treasury bonds. The increase in demand will drive the price of the bonds up – sending rates lower. So, if the dollar goes up, it should ultimately lead to lower yields. To demonstrate the negative effects of bond yields, just take a look at the Nasdaq. It’s underperformed over the last couple of months. That’s because bond yields have been rising. When bond yields rise, tech stocks suffer because the cost of financing increases. After all, if borrowing money gets more expensive, companies have a harder time borrowing the money they need. In turn, that means less funding for innovations… Stalling their growth and hurting their stock price. Fortunately, every time bond yields have eased, even a little, tech stocks bounce. So, if yields begin to trend lower, that’ll be a big signal for tech investors to get back in. After all, some of the largest stocks in the world are trading in the region of their respective 200-day moving averages. Amazon, NVIDIA, Apple, and other mega-cap stocks are looking for a reason to rebound. The dollar’s rebound – and therefore a decrease of bond yields – could be exactly what investors are waiting for. All the best, Eoin Treacy Co-Editor, Market Minute Reader Mailbag In today's reader mailbag, Jeff Clark Alliance member William thanks Eoin on his recent trade recommendation… Thanks for the trade recap. It’s a very interesting strategy. Also, thanks for including me in the beta test. I have a much better understanding of the process after reading the recap. – William And, Rod compliments Eric on his [Wednesday essay]( I always enjoy the articles, but today was a new high (no hype). It's well articulated with actionable items. Thank you. – Rod Thank you, as always, for your thoughtful comments. We look forward to reading them every day. Keep them coming – and send us any questions – at feedback@jeffclarktrader.com. In Case You Missed It… [Man Gets Into a Tesla… What Happens Next Will Shock Everyone (Video)]( “Hi, I’m Jeff Brown… I’m about to get in this Tesla and drive up to a location just a few miles from here to show you Elon Musk’s next big project… What happens next will shock you…” [Click here to see what happened.]( [image]( Get Instant Access Click to read these free reports and automatically sign up for daily research. 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