Traders were twisting and turning along with the stock market today as all three major indexes were weighed down by mixed earnings reports from leading technology companies.

Meta Platforms, Inc. (META – formerly Facebook) stock lost 12% after missing on third quarter earnings expectations and weak fourth quarter projections. Alphabet (GOOGL) lost on the day like it was the pandemic shutdown all over again.

The Nasdaq and S&P 500 took hits following several days of rallies while the Dow barely chalked up a positive day.

The news may be bad, but one Simpler Trading team member sees this constant state of up and down as a regular phase in the stock market. He is also watching a key market influence seen as overriding anything that comes out of this earnings season.

U.S. dollar is only thing that matters in this market

While the stock market looks for earnings season to produce positive results and boost equities, the reality is that most of the concerns are “baked into” this uncertain environment.

Traders will need to step back and look at the bigger picture, and the market influence that is fueling the ups and downs.

Traders should remember what engine is running the world right now, according to John Carter, Founder of Simpler Trading.

“The question is what is going to impact stocks more at this point?” John asked. “Is it going to be the actual earnings or is it going to be the macro economic environment?”

His answer is clear and direct.

“For me the only thing that matters at this point is the U.S. dollar,” John said. “Just think of the entire planet as a derivative of the dollar.”

Earnings don’t trump U.S. dollar influence

John pointed out that all the companies reporting earnings are directly affected by the value of the U.S. dollar. Company sales, valuation, and revenue forecasts are all linked to this fiat.

Any hits or misses related to earnings are baked into the stock market reaction.

“Everybody knows that every company is facing dollar headwinds,” John said. “Every company is facing slowdowns. Companies are laying off team members. This is all known.”

Over the last five trading sessions the dollar has dropped in value from $112.94 to $109.75 at the close today. During that period the stock market experienced multi-day rallies across the board.

“If the dollar is coming down, that also means that interest rates are coming down in bonds, and that is generally supportive of stocks,” John said.

Negative price action in technology stocks interrupted that flow today.

That doesn’t change John’s position that the dollar is the key to stock market movement going forward.

“The dollar is falling,” John said. “That’s all that matters right now.”

Adjust trading plan to fit market environment

If the dollar starts rising again, John will adjust his trading plan accordingly.

Until then he plans to limit, if not remove, any swing trading exposure and work day trades using more complex options trades such as credit spreads. He will also continue 0DTE trades, and in all these setups he is watching for pull backs that create buying opportunities as the dollar falls.

The focus for John is to target daily wins based on a percentage of his trading account while avoiding unnecessary exposure in a volatile market.