Shares of Johnson & Johnson (NYSE: JNJ) and 3-M (NYSE: MMM)
may be telling us something about the dollar's rally.
Chart Courtesy of StockCharts.com
The dollar has been on a tear lately, due to Greece's problems.
Yet, shares of U.S. companies that rely on global sales for a
significant portion of their earnings have been steady. That
means that some in the market are expecting the dollar rally
to moderate in the short to intermediate term.
Chart Courtesy of StockCharts.com
When the dollar's rally picked up steam in January, both JNJ
and MMM rolled over. But over the last few days both stocks have
started to consolidate. This has coincided with a slight stall
in the dollar.
Chart Courtesy of StockCharts.com
As the E.U. has agreed to give Greece a month to get its fiscal
house in order, the relationship between the large U.S. exporters,
such as JNJ and MMM will be very important to watch.
If these two stocks and others in the Dow Jones Industrial average start to sag,
especially if the dollar picks up steam, it will be a signal that the rally in
the dollar is likely to resume.
If the reverse is true, it may signal that some profit taking in the dollar lies
ahead. Investors who own shares in the U.S. Dollar Bull ETF (NYSE: UUP) should
be monitoring this situation closely.
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