Will the strong dollar end the bull market?

Published Tue, Mar 17 20158:26 AM EDTUpdated Tue, Mar 17 201510:00 AM EDT

For my latest "New Ideas" column for CNBC Pro, I discuss the big worry in the market today: the unrelenting rise in the U.S. dollar. I also answer the question, at which oil price will the energy complex stop making money? The hot debate in the market right now involves the U.S. dollar and it's impact on stocks. Much of the commentary is that a stronger dollar, particularly against the euro, will be negative for U.S. equities as American companies lose a competitive advantage in exports and get hurt in conversion of profits from overseas. Those arguments have merit, but history suggests that more often than not, stocks rise when the U.S. dollar heads higher. Here's a 20-year chart of the S & P 500 vs. the U.S. dollar index that I built for CNBC's " Power Lunch " this week. You can see that generally the dollar and stocks trade in the same direction. Source: FactSet The counter argument is that it is not the move that matters as much as the speed of the move. This is one of the fastest, steepest moves for the U.S. dollar ever, and companies (and trading desks) will be caught off guard. A fair point, though Bespoke Investment Group research also suggests stocks can weather a currency storm. Though the U.S. dollar index has moved 20 percent or more in a year only a few times, history is again on stocks' side. Source: Bespoke Investment Group You can see that in the five most recent times a 20 percent dollar move has occurred, stocks ended higher 12 months later on three of those occasions. Also, the median of all the moves was a positive 14.6 percent. This certainly does not mean stocks will weather this dollar storm in the same way. Every period of history tends to be different. The Bespoke data is for the dollar index, not just the dollar against other major currencies such as the euro. Additionally, Europe is a fiscal mess and Japan seems to be in a race to the currency bottom. That said, hopefully this historical context reminds us that the "conventional wisdom" of the dollar dooming stocks may not be so wise. Four under five: With the market's recent dip, there are now four stocks in the S & P 500 with a price-earnings ratio under five. Unsurprisingly, a majority of them are oil related. Stocks with the lowest P/E ratios in the S & P 500 right now are: Goodyear at 2.9 times earnings, followed by Denbury Resources , QEP Resources and Newfield Exploration , which all have P/E ratios in the four times earnings range, according to FactSet. After a relatively benign February, oil fell to a six-year low Tuesday. Though the number of drilling rigs continues to fall, actual production continues to rise. Many producers need the cash flow, but they are only profitable in the mid-$40 range. Read More Top 5 reasons why oil is going lower Your move Wall Street: Mighty Exxon isn't immune. Exxon shares have fallen 12 sessions in a row heading into Monday morning and are now about $10 below it's average target price of $93.85. Analysts have been strangely silent. At some point soon, one should expect either a wave of downgrades or analysts riding to the company's defense. It is too important of a company and stock to be ignored by the sell-siders for long. Follow Brian Sullivan on Twitter @sullyCNBC

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