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Still Polar Opposites

Jan. 24, 2011 10:22 AM ET
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This morning is another day where the major stock market indexes such as the Dow Jones industrial Averages and the S&P 500 Index are trading inverse to the U.S. Dollar Index. Before the opening bell at  the New York Stock Exchange the U.S. Dollar index was trading slightly higher to start the day. This rise in the dollar caused some slight pressure on the major stock indexes, however once the U.S. Dollar Index began to decline and trade lower the major stock indexes caught a bid higher. This inverse relationship between the U.S. Dollar Index and the major stock market indexes is still very much in effect.

Recently many investors in the media have said that the stock market and the U.S. Dollar Index will trade higher together. While that has occurred once in a while it usually occurs when the trading volumes are extremely light. This rare phenomenon occurred also in December 2009 and early January 2010 which is when trading is light due to the holidays. Remember most institutional traders do not want to ruin or hurt their bonuses by trading actively during the holidays and that is the reason why the trading volumes are low at the end and at the start of a year. Traders should keep a chart of the dollar up at all times and watch how the stock market indexes will trade inverse to the U.S. Dollar. 

Nicholas Santiago

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