The Greenback Says It All
Once again, the major stock indexes are coming under heavy selling pressure. The decline this morning is broad based as all of the leading sectors are declining. Generally, when the markets are lower it is due to a stronger U.S. Dollar Index. This morning, the U.S. Dollar Index futures (DX Z1) are trading lower by 0.93 cents to $77.96 per contract. Traders that do not have a chart of the U.S. Dollar Index can follow the PowerShares DB U.S. Dollar Index Bullish Fund (NYSE:UUP). When the U.S. Dollar Index rallies higher the major stock indexes will usually decline and deflate lower. The opposite effect will usually occur when the U.S. Dollar Index declines, stocks will usually inflate and trade higher.
Commodity and energy stocks will usually be the first sectors to decline when the U.S. Dollar Index is strong. This morning, leading stocks such as Exxon Mobil Corp.(NYSE:XOM), Cliffs Natural Resources Inc.(NYSE:CLF), and Southern Copper Corp.(NYSE:SCCO) are all coming under heavy selling pressure. Should the U.S. Dollar Index pullback throughout the session that is when these leading stocks will most likely catch a bid off their intra-day lows. Should the U.S. Dollar Index continue to rally the leading energy and commodity stocks will likely decline further throughout the day.