Fundamentals and Technicals Work Together

I started my journey trading stocks. Eventually I coupled them with options, and shortly after that, I added forex and futures to the mix. I cannot tell you how helpful it is to have a practical understanding of and experience within the various financial markets. For instance, Austin P's article today discusses a likely explanation for some of the U.S. stock market's moves. He does this by combining an understanding of the forex markets with his understanding of the equities markets. A snippet that gets at the heart of his article:

Stock markets in general and index futures in particular are serving as quasi-FX markets counter to the USD wiggles. USD goes one way, euro – yen – oil – gold – stocks go opposite. All day, every day.

I was inaugurated into the trading world through the sect of technical analysis. I love technical analysis, but my mind is far to inquisitive to be happy with mere charts. I wanted to understand what is happening behind the candlesticks, bars, lines, etc. Whether this is necessary in general for successful trading does not really matter, because, for me, it is. I use technical analysis to determine entries, exits, and short term "momentum" trades. And I use fundamentals (well, weak fundamentals) to determine underlying investor psychology and possible long term developments that may negate the strength of my technical analysis (I like to think of fundamentals as being a gravity from which technicals experience a pull).

I had started this article merely to discuss the effects of the weakening dollar on our stock market, but I diverged. However, I would still like to post a chart from Bespoke Investment Group (I had some other graphs, but can't find them at the moment):


Not such a hot rally if you factor in dollar depreciation.