Do Not Stop Looking At This Chart
Traders must continue to watch a chart of the U.S. Dollar Index. This morning, the U.S. Dollar Index futures (DX U1) has pulled back a bit from its overnight high. This pullback in the DXY has helped the major stock market indexes to bounce a little off the morning lows. When the DXY declines the major stock indexes will usually inflate and trade higher. Should the DXY rally higher throughout the trading session traders should expect the major stock indexes to see some more selling pressure as the markets continue to deflate.
Energy and commodity stocks are very sensitive to the action in the DXY, therefore, these stocks will usually trade inverse to the U.S. Dollar Index. Traders can watch leading stocks such as Exxon Mobil Corp.(NYSE:XOM), ConocoPhillips(NYSE:COP), and Freeport McMoRan Copper & Gold Inc.(NYSE:FCX) to be under pressure on the back of a stronger U.S. Dollar Index. Should the U.S. Dollar Index decline or fade from the open these stocks are likely to bounce off the morning lows.