A few things always happen when the U.S. stock market crashes...

The decline spooks investors... Volatility increases... And everyone heads for safe-haven assets.

Usually, folks buy U.S. Treasury bonds. So yields fall as investors bid bond prices up... And the U.S. dollar gets stronger.

This is a tried-and-true formula. But it hasn't played out in recent weeks. Instead, the U.S. dollar is crashing right alongside U.S. stocks.

It's not all bad news, though. According to history, these rare situations tend to end with higher stock prices and a stronger dollar.

Let me explain...

The decline we've seen is no garden-variety market bust.

First, stocks fell due to President Donald Trump's new tariff policy. This wasn't an unforeseen event. The president is in the driver's seat, and he doesn't mind if the market suffers short-term pain.

Similarly, because the government has accepted this decline – and because global investors aren't sure if they can trust the U.S. with their money – investors haven't rushed to typical safe havens.

The yield on 10-year Treasury bonds is above pre-tariff levels... which tells us no one is interested in them. And the dollar has crashed as well.

This has set up a rare situation where the dollar and stocks are falling together. You can see each of their performances into late April in the chart below...

Stocks and the dollar have been falling for most of the year. The losses intensified after Trump announced the new tariffs. And that's creating a rare setup...

Expect Stocks and the Dollar to Rise After Falling Together

Specifically, the S&P 500 Index dropped more than 10% over a recent seven-week stretch. The U.S. dollar is down nearly 8% over the same period.

This is a rare situation. We've only seen one other instance where stocks and the dollar fell this much over a seven-week period... So to get more examples, I looked at every unique seven-week period where stocks fell by 10% or more and the dollar declined by 5% or more.

That's still rare. These simultaneous declines have only happened five other times. But it's not the terrible sign you might expect. Instead, stocks have tended to rise after these extremes. Take a look...

These aren't the kinds of numbers that will win you an early retirement. But buying stocks after these rare setups tends to outperform a typical buy-and-hold strategy.

What's more, stocks were higher in all five instances a year later. So the odds of success are high.

The same is true for the dollar. It tends to outperform after it has fallen alongside stocks. Take a look...

Currencies are less exciting than stocks. They tend to move slowly. And the dollar has barely moved over the past half-century.

Still, this setup led to 4.4% gains for the dollar after a year – much higher than usual. And the dollar was up 80% of the time a year later.

This tells us two main things: First, it's darn rare for stocks and the dollar to fall together at the rate we just witnessed... And, second, that fall doesn't mean the declines will continue.

Stocks have already recovered most of their tariff-induced losses. The dollar hasn't fared as well so far. But according to history, both could see gains in the months ahead.

Good investing,

Brett Eversole