Stocks have been sputtering in and out of positive territory this week as investors try to make sense of recent selloffs. While much of the focus has been on the U.S. indexes, one technician is looking overseas for clarity.
The dollar/yen rallied 5 percent in the first six months of the year, hitting a high in early June. But it's what's happened since then that has Krinsky concerned.
"It briefly traded above this area that it was trading at in 2006 and 2007 and then quickly reversed," said Krinsky, chief market technician at MKM Partners. "That gave us a bit of a long-term false breakout, and now we are trading under the 200-day moving average, which has served as support over the past few years and is now acting as resistance."
For Krinsky, that weakness could spill over into U.S. equities. "There's a very high correlation between dollar/yen and the S&P 500," he said. Krinsky noted that the 50-day correlation between the currency and stocks is 81 percent, meaning "a big move down in dollar/yen would have negative implications for equities."