Throughout 2009 a case can be made that the major indexes rarely sold off sharply on Fridays. One can speculate that the institutional money that can move markets usually does not want to scare the Asian markets over the weekend. Today the markets are down sharply on the back of the stronger U.S. Dollar after China increased their bank requirements by 0.50 percent. When you combine this with the problems in the European Union, presto we see a stronger U.S. Dollar.
By now we all know the stronger U.S. Dollar puts pressure on commodities and inflationary stocks. The declining dollar was the catalyst for the 2009 stock market rally that traded higher by more than 50 percent in just 10 months. As we say everyday since March 2009 stock market low “every trade is a dollar trade.”
Today is interesting, there are a couple of stocks that should remain on watch due to fact that they are showing good relative strength intra-day. The first stock that is showing good intra day relative strength is United States Steel Corporation (NYSE:X). The stock is positive on a negative trading day and may run if the dollar declines further. The other stock is Potash Corp./Saskatchewan (NYSE:POT). This stock is negative today by 0.91 cents intra-day. Considering the bloodbath in the market today this could run higher if the dollar declines. Last but not least is Research In Motion Limited (Nasdaq:RIMM). This stock is higher by 1.30 at the moment when the market is negative showing good daily strength.
If the markets catch a bid on the possible "Friday Effect," these stocks look to benefit. Continue to use caution as the month of February is filled with uncertainty. Please remember the U.S. Dollar is the controlling force that moves these markets.
Nicholas Santiago
Chief Market Strategist
IntheMoneyStocks.com
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