For over ten years now the major stock indexes have traded inverse to the U.S. Dollar Index. That inverse relationship is back in full force today. Anyone can easily see how the S&P 500 Index e-mini futures (ES H2) jumped off the morning lows as soon as the U.S. Dollar Index tumbled lower. All traders and investors should have a chart of the U.S. Dollar Index futures (DX H2) up at all times. If traders do not have the U.S. Dollar Index chart available the PowerShares DB US Dollar Index Bullish (NYSEARCA:UUP) will mimic the action in the dollar.
Most leading commodity stocks will trade inverse to the U.S. Dollar Index. Leading stocks such as Freeport McMoRan Copper & Gold Inc (NYSE:FCX), Cliffs Natural Resources Inc (NYSE:CLF), and BHP Billiton Ltd (NYSE:BHP) will usually all rally when the U.S. Dollar Index declines. These stocks have more to do with the movement in the U.S. Dollar Index than anything else. Traders should expect all of the commodity stocks to trade higher if the U.S. Dollar Index declines throughout the day. The bottom line, it is a dollar story and until that correlation changes it will be for quite some time to come.