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Will the Euro and S&P Divergence Hold?

With the gap up on Monday, a strong divergence has taken hold.

I often talk about the Great Macro Conveyor Belt.

When $UUP goes down, $SPY goes up.

A corrolary is: when $FXE goes up, $SPY goes up.

It has changed this week:


Over the past month, whenever equities have rallied without a move higher in the euro, the difference catches up with an equity selloff.

Could things be different this time? Sure- there has been a ton of newsflow this week with respect to central bank liquidity and ECB financing.

But if the relationships hold, this is one to put in the bearish evidence pile.

by Steven Place

Steven Place is the founder and head trader at