What signal? US stocks and the US dollar are falling simultaneously. History proves that investors should remain vigilant.

Recently, investors have encountered a rare phenomenon, that is the simultaneous decline of the US stock market and the US dollar. This kind of situation is not common in history, and past experience shows that investors should be cautious at this time. According to a report released by Dean Christians, a senior research analyst at market analysis firm SentimenTrader, in the past three months, the S&P 500 index has fallen by 7.96%, while the ICE US Dollar Index, which measures the performance of the US dollar against six major currencies, has dropped by 8.99%. Christians pointed out, "The simultaneous decline of the S&P 500 and the US dollar in the past three months is a rare and noteworthy phenomenon. Usually, during a stock market correction, the US dollar as a safe haven asset would strengthen." This simultaneous decline has sparked various speculations. Some market voices believe that as the Trump administration implements tariff policies, global investors are collectively avoiding US stocks and US dollar assets. Some analysts even begin to worry that the US dollar may lose its status as the global reserve currency. However, Christians does not agree with this view. He pointed out that although the simultaneous decline of "US dollar + stock market" is not common, the driving factors behind it are not mysterious. It is more common for funds to flow back to their home countries due to increased market uncertainty, also known as capital repatriation. This time, the tariff policy has become the trigger, intensifying global trade tensions and prompting foreign investors to withdraw from US assets and seek refuge in their home markets. SentimenTrader conducted a review of similar historical situations: they selected eight occurrences since 1973 where both the US dollar and the S&P 500 had declined by more than 7% in a three-month period. Although this study is more inclined to provide market references rather than explicit trading signals, it reveals some valuable patterns: the performance of the US dollar in the next six months is random, similar to tossing a coin; but one year later, in 75% of cases, the US dollar has risen; the S&P 500 often shows a "rise before fall" pattern: it usually experiences a slight rebound in the next three months, but then loses momentum, with only half of the cases continuing to rise in the fourth to sixth months; more notably, in six cases, the S&P 500 has hit a lower low afterwards, indicating that the market's true bottom is still ahead. The only exceptions were in 1978 and 1998 when there was a rebound after hitting bottom. Christians concluded, "In this kind of historical scenario, the S&P 500 will mostly eventually hit a new low. Therefore, the wiser approach now is to maintain caution and wait for more attractive entry points."