Can The U.S. Dollar Index Decline Enough To Save The Markets?
Since the weekly initial claims number was released at 8:30 am EST this morning, the U.S. Dollar Index(DXY) has declined lower. When the U.S. Dollar Index declines the major stock market indexes will inflate and trade higher. It now seems that computer programs are trading directly inverse to every move in the U.S. Dollar Index. Look at the chart below, you can easily see how the S&P 500 e-mini(ES M1) contract trades higher on any U.S. Dollar Index pullback.
Traders should watch for moves higher in the leading commodity and energy stocks if the U.S. Dollar Index pulls back intra-day. Some stocks that have a tendency to react quickly from moves in the U.S. Dollar Index include Freeport McMoran Copper & Gold Inc.(NYSE:FCX), Cliffs Natural Resources Inc.(NYSE:CLF), and United States Steel Corp.(NYSE:X). Remember, traders can look for these names to trade inverse to the U.S. Dollar Index.