It Is As Inverse As It Can Get
When the U.S. Dollar Index declines the major stock indexes inflate and rally higher. This inverse relationship between the U.S. Dollar Index and the major stock indexes are as inverse as they have ever been. Traders and investors can simply look at the chart below to how correlated these two charts are. As long as the U.S. Dollar Index remains on the weak side and continues to decline the major stock indexes should hold up and keep the intra-day gains into the close. Should the U.S. Dollar Index catch a bid and trade higher off of the lows it would be prudent to expect the major stock indexes to pullback.
Some stocks that have really made strong moves to the upside this afternoon include Chevron Corp.(NYSE:CVX), Caterpillar Inc.(NYSE:CAT), and Amazon.com Inc.(NASDAQ:AMZN). The rally in these stocks show us how the falling U.S. Dollar Index will inflate all sectors and not just the inflation sensitive industry groups.