From The TSI Trader:

I was looking at the U.S. Dollar Index ($DXY) four-hour chart this evening with my favorite True Strength Index (TSI) indicator set to (7,4) and I began to notice the occasional but very severe down spikes in the TSI over the past eight to nine months. These unusually severe readings are, of course, temporary periods in time when the U.S. Dollar Index has come under extreme selling pressure and downward momentum is incredibly and unsustainably intense.

But just looking at this chart really did not tell me much more.

Then I got to wondering. How do these down spikes compare with a chart of the S&P 500? I mean, is there any correlation between the two? Could these extreme and unusual selling episodes in the U.S. Dollar Index possibly tell us something about the movement of the stock market?

So, being the researcher type that I am, I dutifully wrote down the meanest looking down spikes noting their dates, hour, and TSI reading. Then I began to locate these dates on a daily chart of the S&P-500 -- then I recalculated the stock market's daily cycles.

Somewhat to my amazement, there it all was in one easy to grasp picture...

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