There Is Only One Way To Get It Up
As you may know, the major stock market indexes have been struggling since topping out in May 2011. Since that time, there has only been one way to get this market to trade higher; the U.S. Dollar Index has to decline. That's right, unless the U.S. Dollar Index sells off or declines the stock markets cannot seem to trade higher. In fact, when the U.S. Dollar Index strengthens everything deflates and trades lower. Several months ago when oil and commodity prices were soaring higher it was simply because the U.S. Dollar Index was weak and making new lows. Now that the U.S. Dollar Index has traded off the August lows by $4.00 the markets drop on any U.S. Dollar pop.
Leading energy stocks such as Exxon Mobil Corp (NYSE:XOM), and Chevron Corp (NYSE:CVX) have rolled over as soon as the U.S. Dollar Index caught a bid. Today, leading commodity stocks such as Cliffs Natural Resources Inc (NYSE:CLF), Southern Copper Corp (NYSE:SCCO), and Nucor Corp (NYSE:NUE) are all selling off sharply as the U.S. Dollar Index trades higher on the session. Traders can watch for intra-day resistance on the U.S. Dollar Index around the $78.52 level and more resistance around the $78.75 area. Remember, when the U.S. Dollar Index rallies the major stock indexes will decline. The only way this market trades higher is when the dollar dips.