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Markets Live To Fight Another Day

This morning the major stock indexes are all trading higher before the opening bell at the New York Stock Exchange. It is important to note that the U.S. Dollar Index is trading lower today by 0.64 to $87.74. As we know by now when the dollar is lower the Euro currency is trading higher. It is also important to note that when the dollar is lower most commodity and inflationary stocks will inflate, and that is certainly the case this morning. Many leading commodity and inflationary stocks are trading higher this morning such as U.S. Steel Corp (NYSE:X), Cliffs Natural Resources Inc (NYSE:CLF), and Potash Corp (NYSE:POT) just to name a few. 

Should the U.S. Dollar Index begin to reverse the early declines today by trading higher this will deflate the major indexes. Therefore, the dollar remains center stage and one of the most important charts in the market. Simply put everything is trading inverse to the dollar except for gold.

Gold is trading lower by 12.00 points this morning to 1234.00 an ounce after making new highs for the year yesterday. This action in gold comes as fear subsides. It is still very important to realize that gold is a double edge sword and rallies in times of fear as a safe haven and also trades higher when the central banks print more money around the world. The SPDR Gold Shares (NYSE:GLD) are trading down 0.54 to $120.46. 

Spot crude is trading higher by 1.88 to $73.86. Remember oil is a major commodity that will often trade higher when the dollar declines. Crude is also very sensitive to adverse weather, and geopolitical events. The U.S. Oil Fund (NYSE:USO) is trading higher this morning by 0.78 to $33.97.

Remember it is the action of the dollar that drives the markets. Everything seems to be trading inverse to the dollar and until that changes the dollar must be watched at all times.

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Nicholas Santiago
Chief market Strategist