From the desk of Steve Strazza

Have you ever heard of the Nokkie-Stokkie?

It’s forex trader lingo for the Norwegian Krone/Swedish Krona… and right now this obscure cross is setting up for a classic failed breakdown.

After undercutting key support in early May, it’s snapping back toward this level now. And with each passing day, it’s looking more and more like a bear trap.

We’re not just writing about this unheard-of FX pair to amuse you. Believe it or not, the currency pair carries valuable insights.

It’s one of our most trusted intermarket energy whisperers.

So it's no surprise the scoop-n-score setup in the NOK/SEK looks almost identical to the one in Crude Oil Futures:

Crude is working on its own bear trap — carving out a tactical reversal pattern just below a shelf of former support.

...

During our time in New Orleans at the Portfolio Accelerator event, I brought the Israeli Shekel to the table—and it sparked a really interesting discussion.

We were diving into global risk indicators, and I was showing how the Shekel is an excellent tell for speculative growth stocks and the “ARKKy” trade. 

That’s because Israel’s economy isn’t built on commodities or manufacturing like so many others—it’s built on software, cybersecurity, and innovation.

It’s one of the top technology countries overseas.

So when the Shekel starts breaking out, it’s not just a local FX story—it’s the market telling us there is demand for some of the most risk-on corners of the stock market.

And right now? The Shekel is on the verge of a major breakout. It’s literally happening as I write this.

This isn’t some quirky currency coincidence. Currencies are always whispering—sometimes shouting—about...

The Canadian dollar is catching a bid. 

And while the CAD rarely grabs headlines like the euro, pound, or yen, it’s no backbencher—it makes up 9% of the US Dollar Index $DXY, just behind the big three.

It flies under the radar of most investors, and I think that’s a big mistake.

Here’s why.

After years of sliding, the CAD/USD rallied off a major level of support near 0.68—a level that’s marked key turning points in both the currency and Canadian stocks for over a decade.

This bounce looks small now, but it matters.

We’ve talked a lot about how EM currencies tend to drive their respective stock markets. When a “peso” rallies, local equities tend to follow. That effect is stronger in emerging markets because of the heavier reliance on USD funding and the volatility of the currencies there.

Canada, on the other hand, has deep, liquid capital markets, a resource-heavy economy, and two major stock...

The dollar is rebounding, but don’t expect it to last

The US Dollar Index $DXY continues to sit near the top of our macro checklist. 

It’s been one of the more important tells of the cycle, not just for currencies—but for equities, commodities, and global risk assets.

Traditionally, the dollar moves opposite to US stocks. But as technicians, we know better than to marry intermarket correlations. These relationships ebb and flow, strengthen, weaken, invert, and sometimes go completely quiet. That’s normal.

Late last year, a big shift took place as stocks began to move with the dollar. It's not typical, but it’s not without precedent either. 

The Taiwan New Dollar just posted its sharpest two-day rally against the US dollar—ever.

This wasn’t just any rally. It was a vertical move—TWD/USD spiked over 10% in two sessions, tagging a near three-year high in the process.

It caught the entire FX complex leaning the wrong way. It was statistically off the charts. 

This wasn’t a six-sigma move. Or even ten. We're talking fifteen sigma. That’s what quants call an “impossible” outcome. A market move so extreme that it breaks the model. 

A 10% move might not turn heads in a tape where spec. growth stocks like HIMS or PLTR can move that and more intraday—but for a currency pair? It’s seismic. Especially when the pair has been dozing in a multi-year falling wedge. 

That pattern? It just resolved higher. The breakout came right at the apex of the wedge—when no one was paying attention.

With this kind of volatility comes a forced unwind. Exporters, insurers, speculators—everyone caught leaning the wrong way gets squeezed out the door. Fast.

So what’s behind it—but more...

The Mexican peso is the “blue-chip” emerging market currency. It’s long been a favorite for hedge fund carry trades—often paired with the yen—due to Mexico’s relatively high interest rates and liquid FX market.

Beyond its appeal to speculators, the peso has also served as a key risk-on currency—often leading and participating alongside a broad base of international equities and commodities.

Following the election of Claudia Sheinbaum in June of 2024, the Mexican Peso and Mexican stocks took a hit, turning into laggards on the international stage. 

It was clear for those paying attention that the market did not feel optimistic about President Sheinbaum’s economic leadership. 

But the tides are shifting. With a weakening dollar, the Mexican Peso is finding its footing, and Mexican equities are starting to improve in a...

Global equities are on a tear.

From China to Europe to Latin America, they're outperforming the U.S. so far this year.

However, while they look strong, many key indexes are approaching critical inflection points.

These three charts illustrate exactly where things stand and highlight the potential for what might come next.

If the global growth narrative is going to play out, we need to see these international indexes break higher.

Even more importantly, EEM needs to follow suit.

Under that scenario, I want to be buying a lot of these...

My uncle told me in 1999 that tech was about to take a nap.

I had no idea what the hell he was talking about. I was too busy riding bikes and planning my next trip to a contest. 

But I’ll never forget the timing of his trades.

He sold all his tech stocks and started buying gold miners, micro caps, and commodities.

It sounded crazy to me at the time. But his entire analysis came down to one thing:

The Dollar.

We have not seen a real weak dollar environment in nearly 20 years.

Yeah, we’ve seen pullbacks—2017-18, late 2020-21—but a sustained downtrend?

I haven’t seen one.

Look at the chart. The last real decline was after the dot-com crash in 2000.

Since the Great Financial Crisis, the playbook was simple:

Strong dollar. Strong bonds.

That was the foundation that the ETF market was built on. There are almost 1000 fixed income ETFs.

Meanwhile, weak dollar trades—commodity ETFs, inflation plays—kept getting wiped out. 

When it comes to Canada, it's not about tariffs or political headlines making the rounds these days.

The real focus is the Canadian Dollar.

With nearly a 10% weighting in the Dollar Index $DXY, CAD is a crucial piece of the broader currency puzzle.

CAD/USD is pressing against a decade-long support zone, hovering around a key level that triggered strong reversals in 2016 and 2020.

What makes this even more significant is CAD’s close correlation with commodities—especially oil and metals—due to Canada’s heavy exposure to natural resources.

Just look at how the Canadian Dollar has historically traded alongside Crude Oil over the past years.

They look almost identical.

They say history doesn’t repeat, but it often rhymes. If CAD/USD rips higher from here and buyers defend support around 0.68, we can expect energy stocks, metals, and...

While most uptrends have come under pressure in December, the rally in US Dollars has remained strong.

The US Dollar Index $DXY has been climbing in a near-vertical line since it bottomed at the lower bounds of its range three months ago.

Today, DXY is attempting to break out of a base as it trades at its highest level in over two years.

A decisive breakout in the dollar could shift the tide and put significant pressure on risk assets.

As long as the DXY holds above the critical 107.50 level, stock market bulls are on high alert.

Dollar headwinds are the last obstacle stocks want to face heading into the holidays.

You're overthinking the whole dollar and oil connection. 

As a trader, I love finding intermarket relationships to guide the way I look at markets. While those links matter, I have to remember that they aren’t set in stone. They change as the world changes. 

War and energy production can really shake up these correlations.

In early 2022, the correlation between the dollar and oil hit a 20-year high.

That year, the Russia-Ukraine war had just begun, and there was a rush into the US dollar. I like to call the dollar a "panic currency" because when things get tough, people flock to it for safety. 

In 2022, the war caused a huge spike in energy prices, and the dollar rose along with it.

Right now, with so much uncertainty in the world—between wars and an unclear future with the election right around the corner—it makes sense that the dollar would move alongside oil. 

But it won’t last forever.

Notice the strong and consistent negative correlation from 2002 until recently.

And then notice how it pinged...

With stock market investors looking every which way at different market-moving headlines today, let's take a step back and talk about what's really important.

We just got monthly candles. It's time to zoom out. 

And when we do, is there a chart more important than the US Dollar Index $DXY right now?

The dollar has had a very strong inverse correlation with stocks and other risk assets for several years now.

Equities have done well for the past two years while the dollar has been rangebound. 

Just imagine how they'll do if DXY breaks down from its current range:

This is the question investors should be asking themselves right now.
 
Instead of worrying about the war in the Middle East or the longshoremen and dockworkers striking…
 
The real question that matters for all our portfolios, not just today but over longer timeframes, is whether DXY digs in at this support level or breaks down.

If it's the former, look for today's corrective action to have some legs.

If it's the latter, we should be buying this dip aggressively.

Last week, we suggested...