Keep This Chart On The Screen At All Times
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.