The industrial metals are leading the markets lower this afternoon. Leading commodity stocks such as Southern Copper Corp (NYSE:SCCO), Rio Tinto plc (NYSE:RIO), BHP Billiton Ltd (NYSE:BHP), and Vale SA (NYSE:VALE) are declining sharply lower. This industry group has shown weak relative strength when compared to the major stock market indexes. Since the October 4, 2011 stock market low these leading stocks have been unable to trade above their daily chart 50 moving averages, meanwhile, all of the major stock indexes have climbed above their 50 moving averages.
The catalyst for the decline in these leading industrial metal stocks is obviously the stronger U.S. Dollar Index. Every trader and investor should know that when the U.S. Dollar Index rallies higher the major stock indexes will usually deflate and trade lower. Most leading commodity stocks will often trade inverse to the U.S. Dollar Index tick for tick. Traders should expect lower stock prices in all of the leading commodity stocks as long as the U.S. Dollar Index remains strong.