The major stock indexes have once again rolled over from a gap higher open. During every trading day this week, the major stock indexes have given back the early morning gains. This is an options expiration Friday, which usually makes for a volatile and turbulent morning. Yesterday, the major stock indexes really traded all over the map in a very violent manner. There were 10 minute swings where the S&P 500 e-mini contract moved 6-7 points, now that is violent action. Traders should always expect volatile action throughout the week of options expiration and this week has certainly proved that.
Traders must always follow the action in the U.S. Dollar Index. As the U.S. Dollar Index goes the major stock indexes will generally do the opposite. Even this morning, when the U.S. Dollar Index rallies higher the major stock indexes deflate and decline lower. The SPDR Dow Jones Industrial Average ETF(NYSE:DIA) started the day around $124.75 and is now trading down to the $123.83 area, the decline in the DIA came once the U.S. Dollar Index started to trade higher on the day.
Many leading stocks will also fade or decline when the U.S. Dollar Index rallies higher on the day. Traders can just look at the stocks such as Exxon Mobil Corp.(NYSE:XOM), BP PLC(NYSE:BP), and James River Coal Co.(NASDAQ:JRCC), these stocks have sold off from their morning highs on the back of a stronger U.S. Dollar Index. Should the U.S. Dollar Index decline intra-day these stocks should inflate and trade higher.