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inthemoneystock (< 20)

Keep This Chart On The Screen At All Times



November 07, 2011 – Comments (2) | RELATED TICKERS: BHP , CVX , CLF

The only chart that traders need to pay attention to is the chart of the U.S. Dollar Index (DXY). When the U.S. Dollar Index declines throughout the trading session the major stock market indexes will inflate and trade higher. Obviously, leading commodity and energy stocks such as Cliffs Natural Resources Inc (NYSE:CLF) BHP Billiton Ltd (NYSE:BHP), and Chevron Corp (NYSE:CVX) will be some of the first stocks to react and trade inverse to the U.S. Dollar Index. It is important to note that these days everything will trade higher when the U.S. Dollar Index declines. Leading financial stocks, technology stocks, and even retail stocks will inflate and trade higher when the U.S. Dollar declines.

Traders should be careful when the U.S. Dollar Index rallies higher, the major stock indexes will deflate and trade lower very quickly. The action is the U.S. Dollar Index is the driving force behind every stock market move. At this time, traders and investors are very focused on the news coming out of Europe, however, they should simply focus on the chart of the U.S. Dollar Index to determine the direction of this stock market. This inverse relationship between the U.S. Dollar Index and the major stock indexes are as tightly correlated as they have ever been.

Nicholas Santiago

2 Comments – Post Your Own

#1) On November 07, 2011 at 6:39 PM, awallejr (34.04) wrote:

market up, dollar up.

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#2) On November 07, 2011 at 7:16 PM, Frankydontfailme (28.83) wrote:

It has been interesting to see the market rally with such a strong dollar. Certainly a tip in the bulls' direction.

Seems as if people are flocking away from everywhere in the world except the US. The dollar, the Dow, Treasuries.

Quite the opposite of August. One should remember  that these trends can be fickle. (and by the way, gold and silver haven't blinked since bottoming).

My money is on things turning for the worse when the world's attention sways away from Europe (for a bit) and towards our own ludicrous fiscal issues. For  now though, bulls look safe :) 

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