This Market Reveals a Strong Clue About What’s Coming Next

It’s hard to imagine the stock market having a sustained rally while the dollar continues to surge. [Jeff Clark's Market Minute]( “Fed Day” Made a Surging Dollar Our Best Market Clue Yet By Imre Gams, analyst, Market Minute Frustrating. That’s how I’d describe the Fed’s latest performance… and Fed Chair Jerome Powell has certainly made the Fed an easy target for angry investors. You see, there are two parts to “Fed Day.” The first part is at 2 p.m. ET – when the market finds out what the Fed’s interest rate decision is. Now, I’ll give the Fed some credit. Their 75-basis point hike was well telegraphed. The market has been expecting this interest rate hike for a while. If the interest rate increase was unexpected, then the action on Wednesday could’ve been worse. The Fed also releases their latest policy statement at the same time as their interest-rate decision. This allows investors to see what (if anything) has changed from the prior statement. The policy statement is crucial because it can give the market insights as to what the Fed is going to do next. The initial reaction to the new statement was quite positive and the market rallied sharply for a few minutes… Recommended Link [The big investors are smelling it]( [image]( Energy storage is booming as the world moves faster toward renewable energy. It’s rapidly accelerating in the U.S., up 182% quarter over quarter. Bloomberg forecasts a 122x increase in global energy storage. And it’s all happening right now. During this transition to mass adoption is when you could see the biggest gains. [Watch Economist and Investor Dr. Nomi Prins’ latest video to see what the big investors are getting into.]( -- That’s because the new statement said the Fed was considering the cumulative impact of its rate hikes to date. The market interpreted this to mean that the Fed would soon slow down the pace of future interest rate increases. But then… part two of the meeting began. At 2:30 p.m., Jerome Powell answered questions from the financial media… it’s typically where the fireworks will happen. A haphazard remark or a throwaway comment can wreak havoc on the markets. But what happened wasn’t so benign as a careless off-the-cuff comment. Instead, Powell pulled off the timeless bait-and-switch. Free Trading Resources Have you checked out Jeff's free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. He started off strongly by hinting that a slowdown in rate hikes could come as soon as the next meeting, or possibly the one after that. But then, he inexplicably switched tracks. Powell went on to say it was too premature to think about pausing hikes and that recent data points to interest rates having to go higher than previously expected. The market, predictably, sold off hard with the S&P 500 closing 2.5% lower. I’m not going to pile on with the Fed bashing that I’m sure you’ve been seeing in the news. The Fed’s an easy target. What’s not so easy is figuring out where we go from here. But I see one market that’s giving the strongest clue – the U.S. dollar. A side effect of the Fed’s policy decisions has been a surging dollar, which has been a drag on the stock market. Check out this chart below to see what I mean. The red line represents the U.S. dollar, and the black line is the S&P 500… [(Click here to expand image)]( You’ll notice how both markets have moved in opposite directions from one another since the start of 2022. And while it’s no guarantee the stock market will bottom if the dollar reverses course… I do think that’s one key variable we should be on the lookout for. It’s hard to imagine the stock market having a sustained rally while the dollar continues to surge. The good news is that there’s a very clear and obvious level of resistance that the dollar is heading toward. Check out this chart below of the U.S. dollar index (DXY)… [(Click here to expand image)]( It appears the DXY is being pulled toward that 2002 high at 120.28 (lower red line). Multi-year highs often serve as strong resistance, and it should be very difficult for the dollar to break through that 120.28 level. I’ve also included the 1985 high as a frame of reference (top red line). Back then, interest rates were close to 10%. The current Fed funds rate would have to more than double for the dollar to head that high. It remains to be seen if 120.28 will cap the dollar’s incredible strength… but it’s undeniably an incredibly important level for us to keep an eye on. [Bill Gates, Jeff Bezos & More Billionaires buying $4 Stock]( I’ll be looking to buy the dollar on dips as we trade closer to that level. Once we get there, I’ll be on high alert for technical signs of a potential dollar reversal. Whether that means the stock market will also bottom out remains to be seen. Of course, I’ll be sure to keep you updated through the market’s various twists and turns. Happy trading, Imre Gams Analyst, Market Minute Reader Mailbag What are your projections for the dollar’s next move? Let us know your thoughts – and any questions you have – at feedback@jeffclarktrader.com. In Case You Missed It… [How to Invest $100 for a Retirement Fortune?]( If you ONLY had $100… Where could you invest it, to help grow into a retirement fortune? - Bloated Tech Stocks? Facebook, Apple, Netflix, Amazon, Google are down a collective -49% for the year. - Crypto? Bitcoin is down -55% for the year… wiping out TRILLIONS from investors’ hands. - The S&P 500? Down -21% for the year… - [The One-Stock Retirement?]( Millionaire trader Jeff Clark says his ONE stock secret can set you on the path to a retirement fortune. 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