The strong/weak dollar Rydex funds' asset flows have a short history, but by checking out the asset flow charts on DecisionPoint, it appears there is a lot of bottom fishing on the weak dollar fund. Despite the relentless downtrend of the weak dollar fund price, asset flows have been rising. Conversely, the Rydex strong dollar index price has risen to new recovery highs (like the $USD), but the Rydex dollar speculators are not buying into the rally, based upon the lack of asset flows into the fund.
As you noted, fresh $USD COT data will not be released until Monday. Tom McClellan uses a rather complicated approach in measuring the $USD COT commercials data, including the net long/short commercials positions as a percentage of open interest, as well as factoring in weighted commercial's COT data for all currencies. As of the 11-4-05 data, the McClellan $USD commercials indicator is still suggesting higher prices for the dollar going forward.
So from a sentiment perspective, prospects look good for a continued rally in the dollar in the IT.
From a stock market health perspective, the bulls will not want to see the $USD rally too much, particularly a significant move above 100. Below is a long term chart comparing the fortunes of the SPX when the $USD is above or below par, i.e. 100.
Over the past 35 years, the $USD rising above 100 usually results in rough sledding for stock prices. The glaring exception was between 1981 and 1987 when the dollar and stocks enjoyed robust price appreciation.
The theories for the 1981 to 1987 anomaly between a strong dollar coinciding with strong stock prices are many, and Fib presented a few plausible reasons earlier this year when the topic arose.
In 1981, interest rates finally topped around 16% for the 10-year yield, finally bottoming in early 1987 at around 7%, with the $USD finally falling below 100. The 10 year yield then rose nearly 50% to 10.25% in October 1987 (with the help of AG hiking rates in August 1987). The $USD popped above 100 for a while beginning in August 1987, then fell below again, with stocks crashing two months later.
Other than the extraordinary relationship between stocks and the $USD in the 1980s, a USD below 100 is good for stocks, thus a rally in the dollar above 100 going forward will serve as an important warning for stocks.
From a price pattern and sentiment point of view, it appears the USD has more upside potential in the IT. However, for the stock market bulls, any robust rally in the USD taking it above 100 will likely have a negative impact on equities.