Hypothesis: Currency Divergence gives an Indicator of SPY Bottom

2022年10月6日

Just a hypothesis that the SPY will bottom after the various currency pairs (EUR (EXY) and JPY) when charted with the DXY reach maximum divergence will give an idea of when the SPY will bottom.

Analyzed the 2 major recent financial crisis that the US was part of, the Dot Com Bubble and the 2008 Financial Crisis.

2002 Dot Com Bubble
Max Divergence btw JPYUSD and DXY occurred on Jan 2002

Bottom of SPY Occurred on Sep 2002

8 - 9 Months Lag Time between Max Divergence and SPY Bottom

2008 Financial Crisis
Max Divergence btw EXY and DXY occurred between April and July 2008

Bottom of SPY occurred on 02 Feb 2009

7 - 10 Months lag time between Max Divergence and SPY Bottom

Currently as at 7 Oct 2022

The Divergence of btw both the DXY and JPYUSD against the DXY seems to be reaching a Max, and similar to the 2002 Dot Com Bubble, the DXY has diverged much higher than the JPY/USD.

Would we see the SPY bottom in the coming 7 - 10 Months?

Thoughts always welcome (=