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Mirror Opposites

|Includes: DIA, SPY, SSO, PowerShares DB USD Bear ETF (UDN), UUP

This morning and almost every morning for that matter, the major stock market indexes continue to trade inverse to the U.S. Dollar Index (DXY). Traders do not need to listen to the news coming out of Europe or Asia, they simply just need to follow the U.S. Dollar Index. When the DXY declines the stocks markets will inflate and trade higher. The opposite is true when the DXY trades higher, the major stock indexes will deflate and trade lower. Simply put, the U.S. Dollar Index is used like a yo-yo to inflate and deflate the stock markets.

 Almost every central bank in the world has been trying to devalue their currency to try and inflate asset prices in their nation. Just look at how the stock markets have bounced today off the morning lows as the U.S. Dollar Index sold off. Traders can easily see this type of action everyday on the charts. In other words, if you want to have your stocks increase or inflate you must be willing to sacrifice the strength of your currency and have a weaker U.S. Dollar. A weaker dollar buys fewer goods as it becomes diluted. It is also a direct tax on the people using the dollar. We must all remember that the U.S. Dollar is the world's reserve currency. Therefore, if you want to buy a barrel of oil you must use dollars. You cannot buy a barrel of oil using the Thai Baht or the Swedish Krona. The U.S. Dollar Index chart must be followed at all times as it dictates the direction in the stock market.

Nicholas Santiago