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inthemoneystock (< 20)

The Chart That Dominates The World



February 23, 2012 – Comments (0) | RELATED TICKERS: FXY , FXC , FXB

There is simply no chart in the world that is more important than the U.S. Dollar Index. The U.S. Dollar Indexmeasures the performance of the U.S. Dollar against a basket of six leading currencies including the Euro(58.6%), Japanese Yen (12.6%), Pound Sterling (11.9%), Canadian Dollar (9.1%), Swedish Krona (4.2%), and the Swiss Franc (3.6%). Traders can follow CurrencyShares Canadian Dollar Trust (NYSEARCA:FXC), CurrencyShares Japanese Yen Trust (NYSEARCA:FXY), and the CurrencyShares British Pound Sterling Trust (NYSEARCA:FXB) and see how they react wit the U.S. Dollar.

Traders can easily see in the chart below how the major stock indexes will inflate higher as the U.S. Dollar Index declines intra-day. The opposite effect will occur when the U.S. Dollar Index trades higher, the major stock indexes will deflate and sell off. This inverse relationship between the U.S. Dollar Index and the major stock market indexes is as tightly correlated as it has ever been. This morning, gold and silver have started to trade higher once the U.S. Dollar began to sell off around 10:00 am EST. This tells us that the U.S. Dollar Index chart is the most important chart that any trader can follow at this time. It gives us the gauge of inflation that is occurring at any given time in the markets.

Nicholas Santiago

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