The U.S dollar—Invesco DB US Dollar Index Bullish Fund (NYSE:UUP) not only firmed, but pushed over resistance from its 200-Day moving average at 24.69, confirming an accumulation phase.
Meanwhile, the other major indices including the Dow Jones SPDR® Dow Jones Industrial Average ETF Trust (NYSE:DIA), Russell 2000 iShares Russell 2000 ETF (NYSE:IWM), and the S&P 500 SPDR® S&P 500 (NYSE:SPY) sold off through the day on Friday.
Of the 4 indices, only the QQQ was holding a bullish phase over its 50-Day moving average.
Come Monday, if SPY and IWM have a second close under their 50-DMA they will confirm a cautionary phase change.
This shows a potential weakness if only the tech-heavy index QQQ holds when the rest of the indices are break lower. Furthermore, the economy could also be shifting into something Mish has been talking about for a long time now. Stagflation.
Stagflation refers to an economy that is experiencing a simultaneous increase in inflation and stagnation of economic output.
For now, we will plan to continue watching the QQQs for a further divergence from the other indices, as well as the commodities, such as, precious metals and Food, which are potential hedges against an inflationary period.