After a whipsaw week in the markets that saw the travel more than 10,000 points in five trading sessions, investors are searching for clues that the selling may be over. According to one trader who relies heavily on the charts, once such sign could be found in the currency markets.
"Each of those times, a day or two before the stock market bottoms, the U.S. dollar tends to bottom. The thesis behind this being a stronger dollar means a strong U.S. economy," said Kelly.
The Dollar Index, which tracks the dollar against a basket of currencies, is up more than 16 percent in the past year as the U.S. economy continues to strengthen. As Wall Street has churned, the greenback has been in the midst of a four-day rally.
"There's also a push and a pull where you get too strong of a dollar and you get a selloff, " Kelly warned. A stronger dollar can impact multinational company's earnings and end up weighing on the stock market.
The index seemed to have found support at the 200-day moving average this week, something that currency traders tend to use as a proxy for predicting a bear or bull market. "I'm pretty positive we're starting to see the dollar bottom, which should lead to higher equities," Kelly explained.
Kelly said he's looking for a down day in the U.S. markets and an up day in the dollar, and that will be the signal to buy stocks.