weaker dollar == DOW leads?

Discussion in 'Trading' started by empee, Nov 29, 2006.

  1. empee

    empee

    Hi,

    If we are going weaker dollar, than that with portend that companies that bring income from overseas to have EPS grow faster. Maybe this is why DOW is leading?

    Theoretically, the strongest would be:

    Companies that bring in their income from overseas, these would be the industrials like in the DOW (Versus QQQQ or SPY).

    Potentially commodities producers, since stuff would get more expensive (although you could say ppl buy less or we go into recession), so?

    Techs potentially benefit from this since the above would buy more stuff. However, since most of their business is probably domestic business/businesses who do a lot of business domestically, this probably would be a laggard.

    So, is this new economy:

    DOW/Industrials Lead, and Techs lag? (ie inverse relationship from 2000).

    It will become more apparent as we see how much the retracements are for these different indexes, but potentially are we seeing a bull run for Industrials (ie they will be like the techs of 2000)

    ?
     
  2. empee

    empee

    this would also mean IWM would lag since I believe small caps are mostly domestic.
     
  3. maybe if the dollar goes to zero the dow will surpass 100,000
     
  4. Surdo

    Surdo

    Why not trade FXE as a pure EURUSD etf play?