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For Your Eyes Only



August 05, 2011 – Comments (0) | RELATED TICKERS: SCCO , FCX , CLF

Traders better watch the chart of the U.S. Dollar Index very closely. Yesterday, the U.S. Dollar Index soared higher as the major stock indexes deflated and plummeted lower. This morning, the U.S. Dollar Index futures (DX U1) is trading lower by 0.37 cents to $75.00 per contract. When the U.S. Dollar Index rallies and trades higher the major stock and commodity indexes will deflate lower. At this time the inverse relationship between the U.S. Dollar Index and the stock and commodity markets is very much intact. The intra-day support levels on the U.S. Dollar Index are around the $74.83, and $74.60 levels.

Leading commodity stocks are usually the first stocks to come under pressure when the U.S. Dollar Index increases. Stocks such as Freeport McMoRan Copper & Gold Inc.(NYSE:FCX), Cliffs Natural Resources Inc.(NYSE:CLF), and Southern Copper Corp.(NYSE:SCCO) are likely to sell off on the back of a stronger U.S. Dollar Index. Leading energy stocks could also come under selling pressure on any dollar strength. Stocks such as Chevron Corp.(NYSE:CVX), ConocoPhillips(NYSE:COP), and Exxon Mobil Corp.(NYSE:XOM) will often decline on U.S. Dollar Index strength. All of the stocks mentioned will usually react positive should the U.S. Dollar Index decline throughout the trading day.

Nicholas Santiago

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