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Market Headwind Shows No Signs of Dying Down

Pros often point to the stronger dollar as a headwind for the stock market and from what we’re hearing the headwind is going to get worse.

Although a strong dollar sounds like a good thing -- after all it suggests strength - it's actually a problem for bigger companies because when they repatriate profits made in other nations, they get fewer US dollars.

An example of that happened earlier this week. IBM cited currency headwinds as a drag on earnings. Big Blue said currency charges lowered its revenue by about $1 billion.

And if proprietary research from Jeff DeGraaf is right, that phenomenon won’t stop anytime soon.

DeGraaf, of Renaissance Macro Research, is also a CNBC Contributor and has been the #1 ranked technical analyst by Institutional Investor for 7 years. So when he talks charts, we listen. And he says the charts are signaling dollar strength – for some time to come.

“My analysis suggests that the dollar made a double bottom,” a bullish chart pattern.

“I’m looking for dollar strength going forward – for at least the next several quarters and perhaps for the next several years.”

If dollar strength presents challenges for the stock market – there’s at least one sector that DeGraaf thinks has upside.

That’s health care.

“The bases in health care are massive and beautiful,” he says. “I think health care is in a neglect stage. But I think gains look sustainable. And that’s true for the XLV as well as some individual stocks.”

What do you think? We want to know!

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Posted by CNBC's Lee Brodie

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Trader disclosure: On July 19, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Stephanie Link is long AAPL; Stephanie Link is long EBAY; Stephanie Link is long CVS; Stephanie Link is long JPM; Stephanie Link is long STI; Stephanie Link is long MCD; Stephanie Link is long WY; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Josh Brown is long AAPL; Josh Brown is long JPM; Josh Brown is long GDX; Josh Brown is long GLD; Josh Brown is long XLU; Josh Brown is long XLF; Josh Brown is long WMT; Josh Brown is long TGT; Josh Brown is long MCD; Josh Brown is long QCOM; Mike Murphy is long FB; Mike Murphy is long EBAY; Mike Murphy is long TOL; Mike Murphy is long LEN; Mike Murphy is long SWK PUTS; Mike Murphy is long EMC; Mike Murphy is long URI

For Dennis Gartman
Dennis Gartman is long GOLD
Dennis Gartman is long CAD
Dennis Gartman is long AUD/EUR
Dennis Gartman is long HEATING OIL
Dennis Gartman is long S&P 500 INDEX
Dennis Gartman is long WHEAT
Dennis Gartman is long NAT GAS
Dennis Gartman is short EURO
Dennis Gartman is short YEN
Dennis Gartman is short CORN



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